Question 1

"The long-run Phillips curve is vertical at the expected rate of inflation." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect bec

Question 2

Discuss the effects of a surprise inflation reduction policy on unemployment in the short run.If the reduction in inflation is permanent, what happens in the long run?

Accepted Answer

If the reduction in inflation is a surpr

Question 3

If the expected inflation rate rises, then the short-run Phillips curve ________ and the long-run Phillips curve ________.

Accepted Answer

A)  shifts; shifts 
B)  shifts; does not shift 
C)  does not shift; shifts 
D)  does not shift; does not shift 
E)  might shift; shifts only if the short-run Phillips curve shifts 
A)  shifts; shifts 
B)  shifts; does not shift 
C)  does not shift; shifts 
D)  does not shift; does not shift 
E)  might shift; shifts only if the short-run Phillips curve shifts

Question 4

If the Fed uses a surprise inflation reduction plan, there is

Accepted Answer

A)  lower unemployment and an expansion in the short run. 
B)  higher unemployment and a recession in the short run. 
C)  higher unemployment and expansionary inflation in the short run. 
D)  lower unemployment and a recession in the short run. 
E)  higher unemployment and higher inflation in the short run. 
A)  lower unemployment and an expansion in the short run. 
B)  higher unemployment and a recession in the short run. 
C)  higher unemployment and expansionary inflation in the short run. 
D)  lower unemployment and a recession in the short run. 
E)  higher unemployment and higher inflation in the short run.

Question 5

The short-run Phillips curve is

Accepted Answer

A)  downward sloping. 
B)  upward sloping. 
C)  vertical at a constant rate of unemployment. 
D)  horizontal at a constant rate of inflation. 
E)  U-shaped. 
A)  downward sloping. 
B)  upward sloping. 
C)  vertical at a constant rate of unemployment. 
D)  horizontal at a constant rate of inflation. 
E)  U-shaped.

Question 6

When the aggregate demand curve shifts rightward, the price level ________ and the unemployment rate ________.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; decreases 
D)  decreases; increases 
E)  does not change; does not change 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; decreases 
D)  decreases; increases 
E)  does not change; does not change

Question 7

In the United States during the late 1990s, the unemployment rate fell from previous years and the inflation rate was lower than in previous years.This set of events is best described by saying that the

Accepted Answer

A)  economy moved to a lower point on its short-run Phillips curve but the short-run Phillips curve did not shift. 
B)  short-run Phillips curve shifted downward. 
C)  short-run Phillips curve shifted upward. 
D)  economy moved to a higher point on its short-run Phillips curve but the short-run Phillips curve did not shift. 
E)  long-run Phillips curve shifted rightward. 
A)  economy moved to a lower point on its short-run Phillips curve but the short-run Phillips curve did not shift. 
B)  short-run Phillips curve shifted downward. 
C)  short-run Phillips curve shifted upward. 
D)  economy moved to a higher point on its short-run Phillips curve but the short-run Phillips curve did not shift. 
E)  long-run Phillips curve shifted rightward.

Question 8

Okun's Law states that

Accepted Answer

A)  supply creates its own demand. 
B)  as the real wage rate falls, the quantity of labor demanded increases. 
C)  as the unemployment rate rises, the inflation rate falls. 
D)  there is a relationship between the unemployment rate, real GDP, and potential GDP. 
E)  a higher inflation rate leads to a higher nominal interest rate. 
A)  supply creates its own demand. 
B)  as the real wage rate falls, the quantity of labor demanded increases. 
C)  as the unemployment rate rises, the inflation rate falls. 
D)  there is a relationship between the unemployment rate, real GDP, and potential GDP. 
E)  a higher inflation rate leads to a higher nominal interest rate.

Question 9

The short-run Phillips curve shows the relationship between the inflation rate and the unemployment rate when ________ remain(s) constant.

Accepted Answer

A)  monetary policy 
B)  the natural unemployment rate and the expected inflation rate 
C)  fiscal policy 
D)  interest rates 
E)  aggregate demand 
A)  monetary policy 
B)  the natural unemployment rate and the expected inflation rate 
C)  fiscal policy 
D)  interest rates 
E)  aggregate demand

Question 10

The short-run Phillips curve is ________ curve along which an increase in the unemployment rate is associated with ________ in the inflation rate.

Accepted Answer

A)  a vertical; no change 
B)  a downward sloping; a decrease 
C)  an upward sloping; an increase 
D)  a horizontal; no change 
E)  a downward sloping; no change 
A)  a vertical; no change 
B)  a downward sloping; a decrease 
C)  an upward sloping; an increase 
D)  a horizontal; no change 
E)  a downward sloping; no change

Question 11

Comparing the AS-AD model and the Phillips curve, we see that

Accepted Answer

A)  they both are graphed as a relationship between the rate of inflation and the unemployment rate. 
B)  the Phillips curve is graphed as a relationship between the price level and the unemployment rate. 
C)  the AS-AD model is graphed as a relationship between the inflation rate and the rate of real GDP. 
D)  the AS-AD model uses the price level and the Phillips curve uses the rate of inflation. 
E)  the AS-AD model uses the price level and the Phillips curve uses real GDP. 
A)  they both are graphed as a relationship between the rate of inflation and the unemployment rate. 
B)  the Phillips curve is graphed as a relationship between the price level and the unemployment rate. 
C)  the AS-AD model is graphed as a relationship between the inflation rate and the rate of real GDP. 
D)  the AS-AD model uses the price level and the Phillips curve uses the rate of inflation. 
E)  the AS-AD model uses the price level and the Phillips curve uses real GDP.

Question 12

The curve that shows the relationship between inflation and unemployment when the economy is at full employment is the

Accepted Answer

A)  short-run Phillips curve. 
B)  long-run Phillips curve. 
C)  long-run Okun's curve. 
D)  aggregate demand curve. 
E)  aggregate supply curve. 
A)  short-run Phillips curve. 
B)  long-run Phillips curve. 
C)  long-run Okun's curve. 
D)  aggregate demand curve. 
E)  aggregate supply curve.

Question 13

The figure above shows some Phillips curves for an economy.
-Along the short-run Phillips curve SRPC₀ the natural unemployment rate is

Accepted Answer

A)  3 percent. 
B)  6 percent. 
C)  4 percent. 
D)  8 percent. 
E)  an amount that can be determined from the figure but none of the above answers are correct. 
A)  3 percent. 
B)  6 percent. 
C)  4 percent. 
D)  8 percent. 
E)  an amount that can be determined from the figure but none of the above answers are correct.

Question 14

In the United States during the late 1960s, the unemployment rate fell from previous years, and the inflation rate began to rise from previous years.This set of events is best described by saying that the

Accepted Answer

A)  economy moved to a lower point on its short-run Phillips curve but the short-run Phillips curve did not shift. 
B)  short-run Phillips curve shifted upward. 
C)  short-run Phillips curve shifted downward. 
D)  economy moved to a higher point on its short-run Phillips curve but the short-run Phillips curve did not shift. 
E)  long-run Phillips curve became negatively sloped. 
A)  economy moved to a lower point on its short-run Phillips curve but the short-run Phillips curve did not shift. 
B)  short-run Phillips curve shifted upward. 
C)  short-run Phillips curve shifted downward. 
D)  economy moved to a higher point on its short-run Phillips curve but the short-run Phillips curve did not shift. 
E)  long-run Phillips curve became negatively sloped.

Question 15

Moving along the short-run Phillips curve, if ________ increases then ________ decreases.

Accepted Answer

A)  inflation; unemployment 
B)  inflation; the price level 
C)  inflation; real GDP 
D)  unemployment; the price level 
E)  unemployment; the expected inflation rate 
A)  inflation; unemployment 
B)  inflation; the price level 
C)  inflation; real GDP 
D)  unemployment; the price level 
E)  unemployment; the expected inflation rate

Question 16

The short-run Phillips curve shows ________ between the unemployment rate and the inflation rate and the long-run Phillips curve shows ________ between the unemployment rate and the inflation rate.

Accepted Answer

A)  a negative relationship; no relationship 
B)  a negative relationship; a positive relationship 
C)  no relationship; no relationship 
D)  no relationship; a negative relationship 
E)  a positive relationship; a negative relationship 
A)  a negative relationship; no relationship 
B)  a negative relationship; a positive relationship 
C)  no relationship; no relationship 
D)  no relationship; a negative relationship 
E)  a positive relationship; a negative relationship

Question 17

According to Okun's Law, if the natural unemployment rate is 5 percent, the actual unemployment rate is 4 percent, and potential GDP is $10 trillion, then actual real GDP is

Accepted Answer

A)  $12 trillion. 
B)  $11 trillion. 
C)  $9.6 trillion. 
D)  $10.4 trillion. 
E)  $10.2 trillion. 
A)  $12 trillion. 
B)  $11 trillion. 
C)  $9.6 trillion. 
D)  $10.4 trillion. 
E)  $10.2 trillion.

Question 18

-In the figure above, the natural unemployment rate is

Accepted Answer

A)  0 percent. 
B)  2 percent. 
C)  4 percent. 
D)  6 percent. 
E)  8 percent. 
A)  0 percent. 
B)  2 percent. 
C)  4 percent. 
D)  6 percent. 
E)  8 percent.

Question 19

If the natural unemployment rate is 5 percent, the actual unemployment rate is 8 percent, and potential GDP is $15 trillion, then according to Okun's Law, real GDP is

Accepted Answer

A)  $14.25 trillion. 
B)  $14.1 trillion. 
C)  $13.8 trillion. 
D)  $13.05 trillion. 
E)  $15.9 trillion. 
A)  $14.25 trillion. 
B)  $14.1 trillion. 
C)  $13.8 trillion. 
D)  $13.05 trillion. 
E)  $15.9 trillion.

Question 20

If the natural unemployment rate decreases, then the short-run Phillips curve ________ and the long-run Phillips curve ________.

Accepted Answer

A)  does not shift; shifts leftward 
B)  shifts leftward; shifts leftward 
C)  shifts rightward; shifts leftward 
D)  shifts rightward; shifts rightward 
E)  shifts leftward; does not shift 
A)  does not shift; shifts leftward 
B)  shifts leftward; shifts leftward 
C)  shifts rightward; shifts leftward 
D)  shifts rightward; shifts rightward 
E)  shifts leftward; does not shift

"The long-run Phillips curve is vertical at the expected rate of inflation." Is the previous statement correct or incorrect?

Discuss the effects of a surprise inflation reduction policy on unemployment in the short run.If the reduction in inflation is permanent, what happens in the long run?

If the expected inflation rate rises, then the short-run Phillips curve and the long-run Phillips curve .

If the Fed uses a surprise inflation reduction plan, there is

The short-run Phillips curve is

When the aggregate demand curve shifts rightward, the price level and the unemployment rate .

In the United States during the late 1990s, the unemployment rate fell from previous years and the inflation rate was lower than in previous years.This set of events is best described by saying that the

Okun's Law states that

The short-run Phillips curve shows the relationship between the inflation rate and the unemployment rate when ________ remain(s) constant.

The short-run Phillips curve is curve along which an increase in the unemployment rate is associated with in the inflation rate.

Comparing the AS-AD model and the Phillips curve, we see that

The curve that shows the relationship between inflation and unemployment when the economy is at full employment is the

The figure above shows some Phillips curves for an economy. -Along the short-run Phillips curve SRPC₀ the natural unemployment rate is

In the United States during the late 1960s, the unemployment rate fell from previous years, and the inflation rate began to rise from previous years.This set of events is best described by saying that the

Moving along the short-run Phillips curve, if increases then decreases.

The short-run Phillips curve shows between the unemployment rate and the inflation rate and the long-run Phillips curve shows between the unemployment rate and the inflation rate.

According to Okun's Law, if the natural unemployment rate is 5 percent, the actual unemployment rate is 4 percent, and potential GDP is $10 trillion, then actual real GDP is

-In the figure above, the natural unemployment rate is

If the natural unemployment rate is 5 percent, the actual unemployment rate is 8 percent, and potential GDP is $15 trillion, then according to Okun's Law, real GDP is

If the natural unemployment rate decreases, then the short-run Phillips curve and the long-run Phillips curve .

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

Exam 15: The Short-Run Policy Tradeoff

"The long-run Phillips curve is vertical at the expected rate of inflation." Is the previous statement correct or incorrect?

Discuss the effects of a surprise inflation reduction policy on unemployment in the short run.If the reduction in inflation is permanent, what happens in the long run?

If the expected inflation rate rises, then the short-run Phillips curve ________ and the long-run Phillips curve ________.

If the Fed uses a surprise inflation reduction plan, there is

The short-run Phillips curve is

When the aggregate demand curve shifts rightward, the price level ________ and the unemployment rate ________.

In the United States during the late 1990s, the unemployment rate fell from previous years and the inflation rate was lower than in previous years.This set of events is best described by saying that the

Okun's Law states that

The short-run Phillips curve shows the relationship between the inflation rate and the unemployment rate when ________ remain(s) constant.

The short-run Phillips curve is ________ curve along which an increase in the unemployment rate is associated with ________ in the inflation rate.

Comparing the AS-AD model and the Phillips curve, we see that

The curve that shows the relationship between inflation and unemployment when the economy is at full employment is the

The figure above shows some Phillips curves for an economy. -Along the short-run Phillips curve SRPC₀ the natural unemployment rate is

In the United States during the late 1960s, the unemployment rate fell from previous years, and the inflation rate began to rise from previous years.This set of events is best described by saying that the

Moving along the short-run Phillips curve, if ________ increases then ________ decreases.

The short-run Phillips curve shows ________ between the unemployment rate and the inflation rate and the long-run Phillips curve shows ________ between the unemployment rate and the inflation rate.

According to Okun's Law, if the natural unemployment rate is 5 percent, the actual unemployment rate is 4 percent, and potential GDP is $10 trillion, then actual real GDP is

-In the figure above, the natural unemployment rate is

If the natural unemployment rate is 5 percent, the actual unemployment rate is 8 percent, and potential GDP is $15 trillion, then according to Okun's Law, real GDP is

If the natural unemployment rate decreases, then the short-run Phillips curve ________ and the long-run Phillips curve ________.

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

If the expected inflation rate rises, then the short-run Phillips curve and the long-run Phillips curve .

When the aggregate demand curve shifts rightward, the price level and the unemployment rate .

The short-run Phillips curve is curve along which an increase in the unemployment rate is associated with in the inflation rate.

Moving along the short-run Phillips curve, if increases then decreases.

The short-run Phillips curve shows between the unemployment rate and the inflation rate and the long-run Phillips curve shows between the unemployment rate and the inflation rate.

If the natural unemployment rate decreases, then the short-run Phillips curve and the long-run Phillips curve .