Question 1

A rapid and decisive reduction in the rate of growth of the money supply for the purpose of disinflation is called

Accepted Answer

A) a salt water policy. 
B) a cold shower policy. 
C) gradualism. 
D) a cold turkey policy. 
A) a salt water policy. 
B) a cold shower policy. 
C) gradualism. 
D) a cold turkey policy.

Question 2

The Friedman-Phelps analysis suggests that there is a long-term relationship between

Accepted Answer

A) inflation and unemployment. 
B) cyclical inflation and structural unemployment. 
C) unanticipated inflation and cyclical unemployment. 
D) anticipated inflation and structural unemployment. 
A) inflation and unemployment. 
B) cyclical inflation and structural unemployment. 
C) unanticipated inflation and cyclical unemployment. 
D) anticipated inflation and structural unemployment.

Question 3

Countries in which wages adjust slowly to changes in the supply of and demand for labor are likely to have ________ sacrifice ratio.

Accepted Answer

A) an infinite 
B) a high 
C) a low 
D) a zero 
A) an infinite 
B) a high 
C) a low 
D) a zero

Question 4

The short-run Phillips curve shifted during the 1970s primarily because of

Accepted Answer

A) the two large oil price shocks. 
B) the changing demographics of the population. 
C) tight monetary policy. 
D) easy fiscal policy. 
A) the two large oil price shocks. 
B) the changing demographics of the population. 
C) tight monetary policy. 
D) easy fiscal policy.

Question 5

The fact that the long-run Phillips curve is vertical implies that

Accepted Answer

A) monetary policy can't affect unemployment. 
B) money is neutral in the long run. 
C) there is a natural rate of inflation. 
D) money can't affect inflation in the long run. 
A) monetary policy can't affect unemployment. 
B) money is neutral in the long run. 
C) there is a natural rate of inflation. 
D) money can't affect inflation in the long run.

Question 6

Phillips's research looked at British data on

Accepted Answer

A) unemployment and inflation. 
B) unemployment and nominal wage growth. 
C) inflation and nominal wage growth. 
D) unemployment and output. 
A) unemployment and inflation. 
B) unemployment and nominal wage growth. 
C) inflation and nominal wage growth. 
D) unemployment and output.

Question 7

The relationship between inflation and unemployment is given by
π = πe - 4(u - $ \bar u $ ).(a)Draw a diagram showing a long-run Phillips curve and two short-run Phillips curves that contain the following points:
A: π = .04,πe = .04
B: π = .08,πe = .08
C: π = .04,πe = .08
D: π = .08,πe = .04
Label points A,B,C,and D in your diagram.
The unemployment rate at point A equals .05.
(b)What are the values of the natural rate of unemployment and the unemployment rates at points B,C,and D?

Accepted Answer

(a)Long run: vertical line at u = @#LAT-DLM& = 0.0

Question 8

Historically,Brazil has suffered higher and more variable rates of inflation than Venezuela.You would expect the short-run aggregate supply curve of Brazil to be ________ than that of Venezuela,and the short-run Phillips curve of Brazil to be ________ than that of Venezuela.

Accepted Answer

A) flatter; flatter 
B) flatter; steeper 
C) steeper; flatter 
D) steeper; steeper 
A) flatter; flatter 
B) flatter; steeper 
C) steeper; flatter 
D) steeper; steeper

Question 9

Classicals argue that an adverse supply shock would

Accepted Answer

A) raise neither the natural rate of unemployment nor the actual rate of unemployment. 
B) raise the actual rate of unemployment, but not the natural rate of unemployment. 
C) raise the natural rate of unemployment, but not the actual rate of unemployment. 
D) raise both the natural rate of unemployment and the actual rate of unemployment. 
A) raise neither the natural rate of unemployment nor the actual rate of unemployment. 
B) raise the actual rate of unemployment, but not the natural rate of unemployment. 
C) raise the natural rate of unemployment, but not the actual rate of unemployment. 
D) raise both the natural rate of unemployment and the actual rate of unemployment.

Question 10

The relationship between inflation and unemployment is given by
π = πe - 2(u - $ \bar u $ ).
(a)Draw a diagram showing a long-run Phillips curve and two short-run Phillips curves that contain the following points:
A: π = .03,πe = .03
B: π = .06,πe = .06
C: π = .03,πe = .06
D: π = .06,πe = .03
Label points A,B,C,and D in your diagram.
The unemployment rate at point A equals .05.
(b)What are the values of the natural rate of unemployment and the unemployment rates at points B,C,and D?

Accepted Answer

(a)Long run: vertical line at u = @#LAT-DLM& = 0.0

Question 11

The Phillips curve appeared to fit the data well for the United States in the

Accepted Answer

A) 1960s. 
B) 1970s. 
C) 1980s. 
D) 1990s. 
A) 1960s. 
B) 1970s. 
C) 1980s. 
D) 1990s.

Question 12

If you were president of the United States,what would you do to reduce the natural rate of unemployment? Propose at least three different methods.

Accepted Answer

Provide support for job training and wor

Question 13

Keynesians prefer a disinflation policy of

Accepted Answer

A) cold turkey. 
B) stabilization. 
C) gradualism. 
D) aggregate demand management. 
A) cold turkey. 
B) stabilization. 
C) gradualism. 
D) aggregate demand management.

Question 14

Friedman and Phelps suggested that there should not be a stable relationship between inflation and unemployment,but there should be a stable relationship between

Accepted Answer

A) anticipated inflation and frictional unemployment. 
B) anticipated inflation and cyclical unemployment. 
C) unanticipated inflation and frictional unemployment. 
D) unanticipated inflation and cyclical unemployment. 
A) anticipated inflation and frictional unemployment. 
B) anticipated inflation and cyclical unemployment. 
C) unanticipated inflation and frictional unemployment. 
D) unanticipated inflation and cyclical unemployment.

Question 15

The reduction of the inflation rate is called

Accepted Answer

A) deflation. 
B) disinflation. 
C) unflation. 
D) reflation. 
A) deflation. 
B) disinflation. 
C) unflation. 
D) reflation.

Question 16

Ball found that the disinflation of the early 1980s in the United States had a sacrifice ratio of about

Accepted Answer

A) 0) 
B) 1) 
C) 2) 
D) 3) 
A) 0) 
B) 1) 
C) 2) 
D) 3)

Question 17

One cost of a perfectly anticipated inflation is that it

Accepted Answer

A) transfers wealth from lenders to borrowers. 
B) transfers wealth from borrowers to lenders. 
C) increases menu costs. 
D) damages the role of prices as signals in the economy. 
A) transfers wealth from lenders to borrowers. 
B) transfers wealth from borrowers to lenders. 
C) increases menu costs. 
D) damages the role of prices as signals in the economy.

Question 18

In the extended classical model,an anticipated decrease in the money supply would cause output to ________ and the price level to ________ in the short run.

Accepted Answer

A) increase; decrease 
B) increase; remain unchanged 
C) remain unchanged; increase 
D) remain unchanged; decrease 
A) increase; decrease 
B) increase; remain unchanged 
C) remain unchanged; increase 
D) remain unchanged; decrease

Question 19

Hyperinflation occurs when

Accepted Answer

A) the inflation rate rises. 
B) the inflation rate declines. 
C) the inflation rate is extremely high. 
D) the inflation rate is extremely low. 
A) the inflation rate rises. 
B) the inflation rate declines. 
C) the inflation rate is extremely high. 
D) the inflation rate is extremely low.

Question 20

The costs in time and effort incurred by people and firms who are trying to minimize their holdings of cash because of inflation are called

Accepted Answer

A) menu costs. 
B) shoe leather costs. 
C) transactions costs. 
D) imperfect competition costs. 
A) menu costs. 
B) shoe leather costs. 
C) transactions costs. 
D) imperfect competition costs.

A rapid and decisive reduction in the rate of growth of the money supply for the purpose of disinflation is called

The Friedman-Phelps analysis suggests that there is a long-term relationship between

Countries in which wages adjust slowly to changes in the supply of and demand for labor are likely to have ________ sacrifice ratio.

The short-run Phillips curve shifted during the 1970s primarily because of

The fact that the long-run Phillips curve is vertical implies that

Phillips's research looked at British data on

Historically,Brazil has suffered higher and more variable rates of inflation than Venezuela.You would expect the short-run aggregate supply curve of Brazil to be than that of Venezuela,and the short-run Phillips curve of Brazil to be than that of Venezuela.

Classicals argue that an adverse supply shock would

The Phillips curve appeared to fit the data well for the United States in the

If you were president of the United States,what would you do to reduce the natural rate of unemployment? Propose at least three different methods.

Keynesians prefer a disinflation policy of

Friedman and Phelps suggested that there should not be a stable relationship between inflation and unemployment,but there should be a stable relationship between

The reduction of the inflation rate is called

Ball found that the disinflation of the early 1980s in the United States had a sacrifice ratio of about

One cost of a perfectly anticipated inflation is that it

In the extended classical model,an anticipated decrease in the money supply would cause output to and the price level to in the short run.

Hyperinflation occurs when

The costs in time and effort incurred by people and firms who are trying to minimize their holdings of cash because of inflation are called

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Productivity, output, and Employment

Consumption, saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

The Asset Market, money, and Prices

Business Cycles

The Is-Lmad-As Model

Classical Business Cycle Analysis

Keynesianism: the Macroeconomics of Wage and Price Rigidity

Exchange Rates, business Cycles, and Macroeconomic Policy in the Open Economy

Monetary Policy and the Federal Reserve System

Government Spending and Its Financing

Filters

Exam 12: Unemployment and Inflation

A rapid and decisive reduction in the rate of growth of the money supply for the purpose of disinflation is called

The Friedman-Phelps analysis suggests that there is a long-term relationship between

Countries in which wages adjust slowly to changes in the supply of and demand for labor are likely to have ________ sacrifice ratio.

The short-run Phillips curve shifted during the 1970s primarily because of

The fact that the long-run Phillips curve is vertical implies that

Phillips's research looked at British data on

Historically,Brazil has suffered higher and more variable rates of inflation than Venezuela.You would expect the short-run aggregate supply curve of Brazil to be ________ than that of Venezuela,and the short-run Phillips curve of Brazil to be ________ than that of Venezuela.

Classicals argue that an adverse supply shock would

The Phillips curve appeared to fit the data well for the United States in the

If you were president of the United States,what would you do to reduce the natural rate of unemployment? Propose at least three different methods.

Keynesians prefer a disinflation policy of

Friedman and Phelps suggested that there should not be a stable relationship between inflation and unemployment,but there should be a stable relationship between

The reduction of the inflation rate is called

Ball found that the disinflation of the early 1980s in the United States had a sacrifice ratio of about

One cost of a perfectly anticipated inflation is that it

In the extended classical model,an anticipated decrease in the money supply would cause output to ________ and the price level to ________ in the short run.

Hyperinflation occurs when

The costs in time and effort incurred by people and firms who are trying to minimize their holdings of cash because of inflation are called

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Productivity, output, and Employment

Consumption, saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

The Asset Market, money, and Prices

Business Cycles

The Is-Lmad-As Model

Classical Business Cycle Analysis

Keynesianism: the Macroeconomics of Wage and Price Rigidity

Exchange Rates, business Cycles, and Macroeconomic Policy in the Open Economy

Monetary Policy and the Federal Reserve System

Government Spending and Its Financing

Filters

Historically,Brazil has suffered higher and more variable rates of inflation than Venezuela.You would expect the short-run aggregate supply curve of Brazil to be than that of Venezuela,and the short-run Phillips curve of Brazil to be than that of Venezuela.

In the extended classical model,an anticipated decrease in the money supply would cause output to and the price level to in the short run.