Exam 17: The Trade Off between Inflation and Unemployment

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

An economy eliminates a recessionary gap by reducing wages and prices.

Expansionary fiscal and monetary policy from 2008 to 2010,took the risk of being inflationary for the sake of avoiding additional unemployment.

If the aggregate supply curve shifts outward,then unemployment

If workers always see inflation coming,and if they demand wage increases in advance so that inflation does not erode real wages,then the economy's aggregate supply curve on the AD-AS diagram will

The Phillips curve assumes that shocks to the economy come from the demand side.

The proposition that the Fed should concentrate on price stability rather than reducing unemployment is

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

Based on the evidence,most economists believe that the self-correcting mechanism operates

According to the theory of rational expectations,the government can influence output

If aggregate demand in the U.S.had grown more slowly than it actually did in 2010,the

A non-policy reason for the reduction in the natural rate of unemployment is the

In the fall of 2007,most economists felt that the

The Keynesian view of the world is that the

Figure 17-7 -In Figure 17-7,the case for restrictive monetary and fiscal policy is strongest at point

Figure 17-8 -In Figure 17-8,which of the following movements would you associate with a "negative supply shock"?

According to the theory of rational expectations,errors in predicting inflation will

The aggregate supply curve slopes upward when the real wage falls initially as the price level rises.

Adverse shocks such as the crop failures of 1972-1973 and the oil price increases of 1974 and 1979 pushed the economy's

If nominal wages increase at the same rate as inflation,then the aggregate supply curve will be a horizontal line.