Exam 34: The Trade-Off Between Inflation and Unemployment

If inflationary expectations are quite sluggish (that is, they do not adapt quickly), then the short-run Phillips curve will

When the Phillips curve was first formulated (late 1960s), many economists thought that it showed a

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

Most economists agree that the self-correcting mechanism works

If unemployment and inflation move inversely, then we can infer that business fluctuations are

One explanation for the increase in the natural rate of unemployment in 2010 was a mismatch between the skills of the American labor force and the skills that the modern job market demanded.

During the 1960s and early 1970s, economists believed that the Phillips curve indicated

An example of indexing is a "cost of living" adjustment clause in a wage contract.

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

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

Figure 17-1 -Which of the following is true about the economy depicted in Figure 17-1?

Demand-side inflation differs from supply-side inflation in the following way:

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

If aggregate demand had grown faster than it did from 2009 to 2010, then the U.S.economy would have experienced

The U.S.economy in the 1990s benefited from an aggregate supply curve shifting outward.

The economy's self-correcting mechanism

If actual inflation differs from expected inflation, what is the slope of the Phillips curve?

What is the crucial difference between inflation generated on the demand side versus inflation generated on the supply side?

If expectations are "rational," can the Fed control unemployment?

Figure 17-5 -The data illustrated in Figure 17-5 would be most representative of which decade?