Question 1

Deflation refers to

Accepted Answer

A)  a decrease in the rate of inflation. 
B)  a falling price level. 
C)  Both A and B are correct. 
D)  None of the above are correct. 
A)  a decrease in the rate of inflation. 
B)  a falling price level. 
C)  Both A and B are correct. 
D)  None of the above are correct.

Question 2

All of the following have enhanced the Fed's credibility in conducting monetary policy except

Accepted Answer

A)  following through with changes it has announced. 
B)  revealing the Fed's target for the federal funds rate. 
C)  making the minutes of the open market committee meetings public. 
D)  discontinuing the policy of announcing whether it considered the economy to be at greater risk of inflation or recession following each FOMC meeting. 
A)  following through with changes it has announced. 
B)  revealing the Fed's target for the federal funds rate. 
C)  making the minutes of the open market committee meetings public. 
D)  discontinuing the policy of announcing whether it considered the economy to be at greater risk of inflation or recession following each FOMC meeting.

Question 3

During which of the following time periods did inflation remain above 5 percent every year?

Accepted Answer

A)  1990 through 1999 
B)  1973 through 1982 
C)  1968 through 1971 
D)  1958 through 1962 
A)  1990 through 1999 
B)  1973 through 1982 
C)  1968 through 1971 
D)  1958 through 1962

Question 4

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?

Accepted Answer

If workers accurately predict the rate o

Question 5

Employees at the hospital have negotiated a 3 percent increase in wages for the next year,based on their inflation expectations.If inflation is actually 5 percent over the next year,which of the following will occur?

Accepted Answer

A)  Unemployment of hospital employees will rise. 
B)  Real wages for hospital employees will fall. 
C)  Inflation will be 3 percent the following year. 
D)  The increase in inflation is expected. 
A)  Unemployment of hospital employees will rise. 
B)  Real wages for hospital employees will fall. 
C)  Inflation will be 3 percent the following year. 
D)  The increase in inflation is expected.

Question 6

Figure 28-4
  
-If the economy is producing ________,unemployment is at its natural rate.

Accepted Answer

A)  at potential GDP 
B)  above potential GDP 
C)  at an inflation rate of zero 
D)  at an unemployment rate of zero 
A)  at potential GDP 
B)  above potential GDP 
C)  at an inflation rate of zero 
D)  at an unemployment rate of zero

Question 7

According to the ________ Phillips curve,the unemployment rate and the inflation rate are negatively related.

Accepted Answer

A)  long-run 
B)  short-run 
C)  long-run and short-run 
D)  rational expectations 
A)  long-run 
B)  short-run 
C)  long-run and short-run 
D)  rational expectations

Question 8

Robert Shiller posed the following question to workers: "Imagine that next year the inflation rate unexpectedly doubles. How long would it probably take,in these times,before your income is increased enough so that you can afford the same things as you do today?" Shiller found that ________ percent of the workers he interviewed reported that it would take several years to restore the purchasing power of their wages or that this power would never be restored.

Accepted Answer

A)  25 
B)  42 
C)  64 
D)  81 
A)  25 
B)  42 
C)  64 
D)  81

Question 9

The natural rate of unemployment equals

Accepted Answer

A)  the rate of structural unemployment. 
B)  structural plus frictional unemployment. 
C)  structural plus frictional plus cyclical unemployment. 
D)  the rate of unemployment we observe in any given period of measurement. 
A)  the rate of structural unemployment. 
B)  structural plus frictional unemployment. 
C)  structural plus frictional plus cyclical unemployment. 
D)  the rate of unemployment we observe in any given period of measurement.

Question 10

In the 1960s,many economists and policymakers believed the trade-off between inflation and unemployment was permanent.

Accepted Answer

A) True 
 B)False

Question 11

Figure 28-4
  
-The short-run Phillips curve is ________ than the long-run Phillips curve.

Accepted Answer

A)  flatter 
B)  steeper 
C)  less stable 
D)  Both B and C are correct. 
A)  flatter 
B)  steeper 
C)  less stable 
D)  Both B and C are correct.

Question 12

Figure 28-5
  
-Refer to Figure 28-5.Consider the Phillips curves depicted in the graph above.The Fed announces its intention to decrease inflation from 10 percent to 5 percent per year,and it succeeds. If expectations of inflation are not altered by the Fed's announcement,the rate of unemployment will be ________ in the short run.

Accepted Answer

A)  less than 5.5 percent 
B)  5.5 percent 
C)  between 5.5 and 7.5 percent 
D)  7.5 percent 
A)  less than 5.5 percent 
B)  5.5 percent 
C)  between 5.5 and 7.5 percent 
D)  7.5 percent

Question 13

Figure 28-6
  
-If wages and prices adjust rapidly,we would expect expansionary monetary policy to be

Accepted Answer

A)  more likely to reduce the natural rate of unemployment. 
B)  more likely to affect the unemployment rate. 
C)  less likely to affect the unemployment rate. 
D)  less likely to result in a vertical short-run Phillips curve. 
A)  more likely to reduce the natural rate of unemployment. 
B)  more likely to affect the unemployment rate. 
C)  less likely to affect the unemployment rate. 
D)  less likely to result in a vertical short-run Phillips curve.

Question 14

Figure 28-2
  
-An increase in expected inflation will

Accepted Answer

A)  increase real wages. 
B)  decrease the natural rate of unemployment. 
C)  shift the long-run Phillips curve to the right. 
D)  None of the above are correct. 
A)  increase real wages. 
B)  decrease the natural rate of unemployment. 
C)  shift the long-run Phillips curve to the right. 
D)  None of the above are correct.

Question 15

In August 1979,President Jimmy Carter appointed ________ as chairman of the Board of Governors of the Federal Reserve System.

Accepted Answer

A)  Ben Bernanke 
B)  Alan Greenspan 
C)  G. William Miller 
D)  Paul Volcker 
A)  Ben Bernanke 
B)  Alan Greenspan 
C)  G. William Miller 
D)  Paul Volcker

Question 16

The natural rate of unemployment will not change following an increase in ________ unemployment.

Accepted Answer

A)  cyclical 
B)  frictional 
C)  structural 
D)  all of the above 
A)  cyclical 
B)  frictional 
C)  structural 
D)  all of the above

Question 17

Suppose that last year the unemployment rate was 5 percent and the inflation rate was 2.5 percent. If the natural rate of unemployment is 5 percent,how do you expect inflation to change?

Accepted Answer

Inflation is stable when the unemploymen

Question 18

During the 1960s,in face of moderate and stable inflation,people tended to form adaptive expectations of future inflation rates.

Accepted Answer

A) True 
 B)False

Question 19

When will a decrease in aggregate demand not result in a lower inflation rate in the short run?

Accepted Answer

A decrease in aggregate demand will not

Question 20

Figure 28-6
  
-With which of the following statements would a "real business cycle" theorist most closely agree?

Accepted Answer

A)  "Monetary policies have greatest impact on real GDP when they are anticipated." 
B)  "Expansionary monetary policy allows the central bank to control inflation and unemployment simultaneously." 
C)  "Wages adjust slowly to changes in inflation as long as expectations are formed rationally." 
D)  "Technological shocks to the economy explain deviations of real GDP from its potential level." 
A)  "Monetary policies have greatest impact on real GDP when they are anticipated." 
B)  "Expansionary monetary policy allows the central bank to control inflation and unemployment simultaneously." 
C)  "Wages adjust slowly to changes in inflation as long as expectations are formed rationally." 
D)  "Technological shocks to the economy explain deviations of real GDP from its potential level."

Deflation refers to

All of the following have enhanced the Fed's credibility in conducting monetary policy except

During which of the following time periods did inflation remain above 5 percent every year?

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?

Employees at the hospital have negotiated a 3 percent increase in wages for the next year,based on their inflation expectations.If inflation is actually 5 percent over the next year,which of the following will occur?

Figure 28-4 -If the economy is producing ________,unemployment is at its natural rate.

According to the ________ Phillips curve,the unemployment rate and the inflation rate are negatively related.

The natural rate of unemployment equals

In the 1960s,many economists and policymakers believed the trade-off between inflation and unemployment was permanent.

Figure 28-4 -The short-run Phillips curve is ________ than the long-run Phillips curve.

Figure 28-6 -If wages and prices adjust rapidly,we would expect expansionary monetary policy to be

Figure 28-2 -An increase in expected inflation will

In August 1979,President Jimmy Carter appointed ________ as chairman of the Board of Governors of the Federal Reserve System.

The natural rate of unemployment will not change following an increase in ________ unemployment.

Suppose that last year the unemployment rate was 5 percent and the inflation rate was 2.5 percent. If the natural rate of unemployment is 5 percent,how do you expect inflation to change?

During the 1960s,in face of moderate and stable inflation,people tended to form adaptive expectations of future inflation rates.

When will a decrease in aggregate demand not result in a lower inflation rate in the short run?

Figure 28-6 -With which of the following statements would a "real business cycle" theorist most closely agree?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Macroeconomics in an Open Economy

The International Financial System

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Exam 17: Inflation, unemployment, and Federal Reserve Policy

Deflation refers to

All of the following have enhanced the Fed's credibility in conducting monetary policy except

During which of the following time periods did inflation remain above 5 percent every year?

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?

Employees at the hospital have negotiated a 3 percent increase in wages for the next year,based on their inflation expectations.If inflation is actually 5 percent over the next year,which of the following will occur?

Figure 28-4 -If the economy is producing ________,unemployment is at its natural rate.

According to the ________ Phillips curve,the unemployment rate and the inflation rate are negatively related.

The natural rate of unemployment equals

In the 1960s,many economists and policymakers believed the trade-off between inflation and unemployment was permanent.

Figure 28-4 -The short-run Phillips curve is ________ than the long-run Phillips curve.

Figure 28-6 -If wages and prices adjust rapidly,we would expect expansionary monetary policy to be

Figure 28-2 -An increase in expected inflation will

In August 1979,President Jimmy Carter appointed ________ as chairman of the Board of Governors of the Federal Reserve System.

The natural rate of unemployment will not change following an increase in ________ unemployment.

Suppose that last year the unemployment rate was 5 percent and the inflation rate was 2.5 percent. If the natural rate of unemployment is 5 percent,how do you expect inflation to change?

During the 1960s,in face of moderate and stable inflation,people tended to form adaptive expectations of future inflation rates.

When will a decrease in aggregate demand not result in a lower inflation rate in the short run?

Figure 28-6 -With which of the following statements would a "real business cycle" theorist most closely agree?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Macroeconomics in an Open Economy

The International Financial System

Filters