Question 1

According to Friedman and Phelps,policymakers face a tradeoff between inflation and unemployment

Accepted Answer

A) only in the long run. 
B) only in the short run. 
C) in neither the long run nor short run. 
D) in both the short run and long run. 
A) only in the long run. 
B) only in the short run. 
C) in neither the long run nor short run. 
D) in both the short run and long run.

Question 2

Some countries have had high inflation rates for a long time and other countries have had low inflation rates for a long time.Yet in some of the high inflation countries the average unemployment rate has been about the same or sometimes higher than in the low inflation countries.Explain how these observations can be consistent with the Phillips curve.

Accepted Answer

They are consistent with the long-run Ph

Question 3

The long-run Phillips curve would shift left if

Accepted Answer

A) the money supply increased or if the minimum wage was reduced. 
B) the money supply increased but not if the minimum wage was reduced. 
C) the minimum wage was reduced but not if the money supply increased. 
D) None of the above is correct. 
A) the money supply increased or if the minimum wage was reduced. 
B) the money supply increased but not if the minimum wage was reduced. 
C) the minimum wage was reduced but not if the money supply increased. 
D) None of the above is correct.

Question 4

In the long run a reduction in the money supply growth rate effects

Accepted Answer

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

Question 5

In the long run,an increase in the money supply growth rate

Accepted Answer

A) increases inflation and shifts the short-run Phillips curve right. 
B) increases inflation and shifts the short-run Phillips curve left. 
C) decreases inflation and shifts the short-run Philips curve right. 
D) decreases inflation and shifts the short-run Phillips curve left. 
A) increases inflation and shifts the short-run Phillips curve right. 
B) increases inflation and shifts the short-run Phillips curve left. 
C) decreases inflation and shifts the short-run Philips curve right. 
D) decreases inflation and shifts the short-run Phillips curve left.

Question 6

Which of the following explains the time-inconsistency of policy explained by Kydland and Prescott?

Accepted Answer

A) A contractionary monetary policy will lead to higher unemployment in the short-run but not the long-run. 
B) An expansionary monetary policy will lead to higher unemployment in the short-run but not the long-run. 
C) Expected inflation is higher than otherwise if the public believes that policymakers will be tempted to raise inflation to reduce unemployment. 
D) Expected inflation is lower than otherwise if the public believes that policymakers will be tempted to lower inflation to reduce unemployment. 
A) A contractionary monetary policy will lead to higher unemployment in the short-run but not the long-run. 
B) An expansionary monetary policy will lead to higher unemployment in the short-run but not the long-run. 
C) Expected inflation is higher than otherwise if the public believes that policymakers will be tempted to raise inflation to reduce unemployment. 
D) Expected inflation is lower than otherwise if the public believes that policymakers will be tempted to lower inflation to reduce unemployment.

Exam 35: The Short Run Trade Off Between Inflation and Unemployment

According to Friedman and Phelps,policymakers face a tradeoff between inflation and unemployment

The long-run Phillips curve would shift left if

In the long run a reduction in the money supply growth rate effects

In the long run,an increase in the money supply growth rate

Which of the following explains the time-inconsistency of policy explained by Kydland and Prescott?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Applications

Supply, demand, and Government Policies

Consumers, producers, and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

Five Debates Over Macroeconomic Policy

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