Exam 17: Inflation, unemployment, and Federal Reserve Policy

Figure 28-3 -Refer to Figure 28-3.If firms and workers have rational expectations,an expansionary monetary policy will cause the short-run equilibrium to move from

If workers accurately predict the rate of inflation,is there a short-run trade-off between inflation and unemployment,as predicted by the Phillips curve? Why or why not?

If workers and firms have rational expectations,they understand that ________ monetary policy will raise the inflation rate,so actual inflation ________ expected inflation.

Figure 28-2 -Refer to Figure 28-2.Suppose the economy is at point A.The Fed uses expansionary monetary policy to lower the unemployment rate permanently below the level associated with A.Which of the following will occur?

A falling price level is called ________ and a fall in the rate of inflation is called ________.

If inflationary expectations on the part of the public increase,the trade-off between inflation and unemployment becomes worse.

If changes in inflation are higher than expected,

If workers and firms ignore inflation or form their inflation expectations adaptively,expansionary monetary policy will lower unemployment permanently.

Figure 28-2 -Refer to Figure 28-2.Suppose the economy is at point B.If the Fed increases the money supply so that inflation increases,the economy will ________ in the short run,holding all else constant.

Which of the following could increase unemployment and inflation simultaneously?

Figure 28-4 -Refer to Figure 28-4.A supply shock,such as rising oil prices,would be depicted as a movement from ________.

With which of the following statements would a "real business cycle" theorist most closely agree?

Models that focus on factors such as technology shocks rather than "monetary" explanations of fluctuations in real GDP are called

Employees at the university have negotiated a 5 percent increase in wages for the next year,based on their inflation expectations.If inflation is actually 4 percent over the next year,which of the following will occur?

If the economy experiences a negative supply shock,which of the following will be true?

According to the short-run Phillips curve,the unemployment rate and the inflation rate are

According to the short-run Phillips curve,which of the following would result in low rates of unemployment?

In conducting monetary policy,how has the Federal Reserve enhanced its credibility?

If the Federal Reserve attempts to continue reducing unemployment by manipulating monetary policy,which of the following would you expect to see?

A study conducted by Alberto Alesina and Lawrence Summers concluded that countries with highly independent central banks had ________ than countries whose central banks had little independence.