Exam 33: The Trade-Off Between Inflation and Unemployment

One reason why the Phillips curve "broke down" is

The period from the late 1990s to the winter of 2000 was marked by falling unemployment rates and falling inflation rates as well.How does economic theory explain this apparent violation of the Phillips curve model?

If workers underestimate inflation, the aggregate supply curve will tend to be

If the fluctuations in the economy's real growth rate from year to year are caused primarily by variations in the rate at which aggregate supply increases, then data would show

At the natural rate of unemployment, the long-run Phillips curve has a(n)

In 2008-2010, American policymakers decided to risk

Contractual provisions based on indexing are also called

The main process by which a recessionary gap is eliminated is a(n)

If, in the long run, people adjust their price expectation so that all prices and incomes move proportionately to an increase in the price level, then the long-run Phillips curve is vertical.

If workers expect inflation, and negotiate wage increases that exactly match price increases, the result is a

The Phillips curve is built on the assumption that business fluctuations are

The suggestion that the Fed concentrate only on reducing inflation is an attempt to

Figure 33-8 ​ -In Figure 33-8, which of the following movements reflects the closing of an inflationary gap through the economy's self-correcting mechanism?

Stimulating aggregate demand to reduce unemployment will aggravate inflation.

Figure 33-2 ​ -Given the situation in graph (1) in Figure 33-2, what action could be expected from the economy's self-correcting mechanism?

If expectations are rational, inflation can be reduced without a period of high unemployment.

If unemployment and inflation always move in the same direction, then we can infer that business fluctuations are

In the 1990s, the rising value of the U.S.dollar made imported goods cheaper and this shifted the