Question 1

A decrease in AS will trigger more inflation under which of the following conditions?

Accepted Answer

A)  AD is relatively steep. 
B)  AD is relatively flat. 
C)  AS is relatively steep. 
D)  AS is relatively flat. 
A)  AD is relatively steep. 
B)  AD is relatively flat. 
C)  AS is relatively steep. 
D)  AS is relatively flat.

Question 2

When the aggregate supply curve shifts adversely,what happens to the relationship shown in the Phillips curve?

Accepted Answer

A)  It is reinforced, and made more applicable for policy. 
B)  It is destroyed, and no longer applies for policy. 
C)  It is unchanged, although the curve becomes less steep. 
D)  It is unchanged, although the curve shifts inward and to the left. 
A)  It is reinforced, and made more applicable for policy. 
B)  It is destroyed, and no longer applies for policy. 
C)  It is unchanged, although the curve becomes less steep. 
D)  It is unchanged, although the curve shifts inward and to the left.

Question 3

Figure 17-6
  
-If the economy in 34-6 (b)is experiencing an inflationary gap (point g),the economy's self-correcting process will move unemployment to ____ and inflation to ____.

Accepted Answer

A)  4 percent; 6 percent 
B) 5.5 percent; 5 percent 
C) 5.5 percent; 7 percent 
D) 5.5 percent; 2 percent 
A)  4 percent; 6 percent 
B) 5.5 percent; 5 percent 
C) 5.5 percent; 7 percent 
D) 5.5 percent; 2 percent

Question 4

The origin of the Phillips curve is the idea that an increase in

Accepted Answer

A)  AD will lead to more inflation and more unemployment. 
B)  AD will lead to more inflation and lower unemployment. 
C)  AS will lead to lower inflation and lower unemployment. 
D)  AS will lead to less inflation and higher unemployment. 
A)  AD will lead to more inflation and more unemployment. 
B)  AD will lead to more inflation and lower unemployment. 
C)  AS will lead to lower inflation and lower unemployment. 
D)  AS will lead to less inflation and higher unemployment.

Question 5

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

Accepted Answer

A)  from the demand side. 
B)  from the supply side. 
C)  from both the demand and supply side. 
D)  purely random events. 
A)  from the demand side. 
B)  from the supply side. 
C)  from both the demand and supply side. 
D)  purely random events.

Question 6

Supply-side inflation will increase the price level and reduce real GDP.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A)  vertical slope. 
B)  horizontal slope. 
C)  upward slope. 
D)  downward slope. 
A)  vertical slope. 
B)  horizontal slope. 
C)  upward slope. 
D)  downward slope.

Question 8

If AS increases at a faster rate than AD,the result will be

Accepted Answer

A)  demand-side inflation. 
B)  supply-side inflation. 
C)  falling prices. 
D)  stable prices. 
A)  demand-side inflation. 
B)  supply-side inflation. 
C)  falling prices. 
D)  stable prices.

Question 9

Contractual provisions based on indexing are also called

Accepted Answer

A)  withdrawal clauses. 
B)  swap clauses. 
C)  escalator clauses. 
D)  averaging clauses. 
A)  withdrawal clauses. 
B)  swap clauses. 
C)  escalator clauses. 
D)  averaging clauses.

Question 10

In the short run,fiscal and monetary policy cause unemployment and inflation to move in opposite directions because

Accepted Answer

A)  the Fed and Congress rarely agree on policy. 
B)  one controls aggregate demand, the other controls aggregate supply. 
C)  both policies control only aggregate supply. 
D)  both policies control only aggregate demand. 
A)  the Fed and Congress rarely agree on policy. 
B)  one controls aggregate demand, the other controls aggregate supply. 
C)  both policies control only aggregate supply. 
D)  both policies control only aggregate demand.

Question 11

Some economists argue that there is no such thing as a short-run Phillips curve.Who are these economists and what is their argument?

Accepted Answer

The theory of rational expectations disa

Question 12

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 demand increases,then data would show

Accepted Answer

A)  a cyclical relationship between inflation and unemployment. 
B)  a direct relationship between inflation and unemployment. 
C)  an inverse relationship between inflation and unemployment. 
D)  no relationship between inflation and unemployment. 
A)  a cyclical relationship between inflation and unemployment. 
B)  a direct relationship between inflation and unemployment. 
C)  an inverse relationship between inflation and unemployment. 
D)  no relationship between inflation and unemployment.

Question 13

Figure 17-8
  
-In Figure 17-8,which of the following movements illustrates the response of the economy to an increase in aggregate demand when expectations are "rational"?

Accepted Answer

A)  C to A 
B)  C to B 
C)  C to D 
D)  C to E 
A)  C to A 
B)  C to B 
C)  C to D 
D)  C to E

Question 14

Politicians and economists who are generally conservative tend to believe that

Accepted Answer

A)  the self-correcting mechanism is slow and unpredictable. 
B)  the short-run Phillips curve is relatively steep. 
C)  the costs of unemployment are high. 
D)  expectations in reaction to policy measures are very slow to change. 
A)  the self-correcting mechanism is slow and unpredictable. 
B)  the short-run Phillips curve is relatively steep. 
C)  the costs of unemployment are high. 
D)  expectations in reaction to policy measures are very slow to change.

Question 15

Which of the following observations concerning the Phillips curve is not t?

Accepted Answer

A)  They are normally upward-sloping. 
B)  They are more commonly constructed for price inflation. 
C)  They depict the inverse relation between wage inflation and unemployment. 
D)  They depict the rate of unemployment on the horizontal axis. 
A)  They are normally upward-sloping. 
B)  They are more commonly constructed for price inflation. 
C)  They depict the inverse relation between wage inflation and unemployment. 
D)  They depict the rate of unemployment on the horizontal axis.

Question 16

Most economists today believe that the Phillips curve is

Accepted Answer

A)  vertical in the short run but downward sloping in the long run. 
B)  upward sloping in the short run but vertical in the long run. 
C)  downward sloping in the short run but vertical in the long run. 
D)  vertical in the short run but upward sloping in the long run. 
A)  vertical in the short run but downward sloping in the long run. 
B)  upward sloping in the short run but vertical in the long run. 
C)  downward sloping in the short run but vertical in the long run. 
D)  vertical in the short run but upward sloping in the long run.

Question 17

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 demand increases,then data would show the

Accepted Answer

A)  worst recession occurs when output expands most rapidly. 
B)  slowest inflation occurs when output expands most rapidly. 
C)  slowest economic growth occurs when output grows most rapidly. 
D)  most rapid inflation occurs when output expands most rapidly. 
A)  worst recession occurs when output expands most rapidly. 
B)  slowest inflation occurs when output expands most rapidly. 
C)  slowest economic growth occurs when output grows most rapidly. 
D)  most rapid inflation occurs when output expands most rapidly.

Question 18

Demand-side inflation is usually accompanied by increasing real GDP,while supply-side inflation is usually accompanied by falling real GDP.

Accepted Answer

A) True 
 B)False

Question 19

Figure 17-8
  
-In Figure 17-8,the aggregate supply curve is shifting inward as we move from

Accepted Answer

A)  A to C. 
B)  C to E. 
C)  A to B. 
D)  D to C. 
A)  A to C. 
B)  C to E. 
C)  A to B. 
D)  D to C.

Question 20

The natural rate of unemployment corresponds to what is sometimes called the full employment unemployment rate.

Accepted Answer

A) True 
 B)False

A decrease in AS will trigger more inflation under which of the following conditions?

When the aggregate supply curve shifts adversely,what happens to the relationship shown in the Phillips curve?

Figure 17-6 -If the economy in 34-6 (b)is experiencing an inflationary gap (point g),the economy's self-correcting process will move unemployment to and inflation to .

The origin of the Phillips curve is the idea that an increase in

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

Supply-side inflation will increase the price level and reduce real GDP.

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

If AS increases at a faster rate than AD,the result will be

Contractual provisions based on indexing are also called

In the short run,fiscal and monetary policy cause unemployment and inflation to move in opposite directions because

Some economists argue that there is no such thing as a short-run Phillips curve.Who are these economists and what is their argument?

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 demand increases,then data would show

Figure 17-8 -In Figure 17-8,which of the following movements illustrates the response of the economy to an increase in aggregate demand when expectations are "rational"?

Politicians and economists who are generally conservative tend to believe that

Which of the following observations concerning the Phillips curve is not t?

Most economists today believe that the Phillips curve is

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 demand increases,then data would show the

Demand-side inflation is usually accompanied by increasing real GDP,while supply-side inflation is usually accompanied by falling real GDP.

Figure 17-8 -In Figure 17-8,the aggregate supply curve is shifting inward as we move from

The natural rate of unemployment corresponds to what is sometimes called the full employment unemployment rate.

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

Filters

Exam 17: The Trade Off between Inflation and Unemployment

A decrease in AS will trigger more inflation under which of the following conditions?

When the aggregate supply curve shifts adversely,what happens to the relationship shown in the Phillips curve?

Figure 17-6 -If the economy in 34-6 (b)is experiencing an inflationary gap (point g),the economy's self-correcting process will move unemployment to ____ and inflation to ____.

The origin of the Phillips curve is the idea that an increase in

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

Supply-side inflation will increase the price level and reduce real GDP.

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

If AS increases at a faster rate than AD,the result will be

Contractual provisions based on indexing are also called

In the short run,fiscal and monetary policy cause unemployment and inflation to move in opposite directions because

Some economists argue that there is no such thing as a short-run Phillips curve.Who are these economists and what is their argument?

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 demand increases,then data would show

Figure 17-8 -In Figure 17-8,which of the following movements illustrates the response of the economy to an increase in aggregate demand when expectations are "rational"?

Politicians and economists who are generally conservative tend to believe that

Which of the following observations concerning the Phillips curve is not t?

Most economists today believe that the Phillips curve is

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 demand increases,then data would show the

Demand-side inflation is usually accompanied by increasing real GDP,while supply-side inflation is usually accompanied by falling real GDP.

Figure 17-8 -In Figure 17-8,the aggregate supply curve is shifting inward as we move from

The natural rate of unemployment corresponds to what is sometimes called the full employment unemployment rate.

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

Filters

Figure 17-6 -If the economy in 34-6 (b)is experiencing an inflationary gap (point g),the economy's self-correcting process will move unemployment to and inflation to .