Question 1

What is the Phillips curve?
Discuss both the short-run and long-run Phillips curve.

Accepted Answer

In general,a Phillips curve shows a rela

Question 2

If the unemployment rate initially equals its natural rate,then if the inflation rate rises above its expected rate,the unemployment rate ________.

Accepted Answer

A)  equals the natural rate 
B)  remains constant 
C)  falls below its natural rate 
D)  rises above its natural rate 
A)  equals the natural rate 
B)  remains constant 
C)  falls below its natural rate 
D)  rises above its natural rate

Question 3

A decrease in the expected inflation rate shifts the short-run Phillips curve

Accepted Answer

A)  downward and shifts the long-run Phillips curve leftward. 
B)  upward and shifts long-run Phillips curve rightward. 
C)  downward and creates a movement downward along the long-run Phillips curve. 
D)  upward and creates a movement upward along the long-run Phillips curve. 
A)  downward and shifts the long-run Phillips curve leftward. 
B)  upward and shifts long-run Phillips curve rightward. 
C)  downward and creates a movement downward along the long-run Phillips curve. 
D)  upward and creates a movement upward along the long-run Phillips curve.

Question 4

During a cost-push inflation spiral,the money wage rate ________ and the quantity of money ________.

Accepted Answer

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

Question 5

The government estimates that the natural unemployment rate has increased from 4.8 percent in 2006 to 5.2 percent in late 2012.If these estimates are accurate,the short-run Phillips curve has ________.

Accepted Answer

A)  shifted rightward 
B)  shifted leftward 
C)  not shifted 
D)  None of the above answers are correct because the effect on the short-run Phillips curve is ambiguous. 
A)  shifted rightward 
B)  shifted leftward 
C)  not shifted 
D)  None of the above answers are correct because the effect on the short-run Phillips curve is ambiguous.

Question 6

Both the new classical and new Keynesian business cycle theories agree that

Accepted Answer

A)  expected changes in aggregate demand lead to the business cycle. 
B)  unexpected changes in aggregate demand cannot result in a business cycle. 
C)  the money wage rate is influenced by rational expectations of the price level. 
D)  the long-term nature of wage contracts allow expected changes in the price level to cause business cycles. 
A)  expected changes in aggregate demand lead to the business cycle. 
B)  unexpected changes in aggregate demand cannot result in a business cycle. 
C)  the money wage rate is influenced by rational expectations of the price level. 
D)  the long-term nature of wage contracts allow expected changes in the price level to cause business cycles.

Question 7

The early 1990s were the last period of substantial demand-pull inflation in the U.S.

Accepted Answer

A) True 
 B)False

Question 8

An increase in the expected inflation rate shifts

Accepted Answer

A)  both the short-run and the long-run Phillips curves upward. 
B)  the short-run but not the long-run Phillips curve upward. 
C)  the long-run but not the short-run Phillips curve upward. 
D)  neither the short-run nor the long-run Phillips curve. 
A)  both the short-run and the long-run Phillips curves upward. 
B)  the short-run but not the long-run Phillips curve upward. 
C)  the long-run but not the short-run Phillips curve upward. 
D)  neither the short-run nor the long-run Phillips curve.

Question 9

Which of the following statements about a cost-push inflation is correct?

Accepted Answer

A)  Cost-push inflation starts when an increase in aggregate demand "pushes" costs higher. 
B)  Cost-push inflation might start with a rise in the price of raw materials, but it requires increases in the quantity of money to persist. 
C)  To persist, cost-push inflation needs a continual series of cost hikes with no change in aggregate demand. 
D)  The United States has never experienced a cost-push inflation. 
A)  Cost-push inflation starts when an increase in aggregate demand "pushes" costs higher. 
B)  Cost-push inflation might start with a rise in the price of raw materials, but it requires increases in the quantity of money to persist. 
C)  To persist, cost-push inflation needs a continual series of cost hikes with no change in aggregate demand. 
D)  The United States has never experienced a cost-push inflation.

Question 10

Cost-push inflation starts with

Accepted Answer

A)  an increase in aggregate demand. 
B)  a decrease in aggregate demand. 
C)  an increase in short-run aggregate supply. 
D)  a decrease in short-run aggregate supply. 
A)  an increase in aggregate demand. 
B)  a decrease in aggregate demand. 
C)  an increase in short-run aggregate supply. 
D)  a decrease in short-run aggregate supply.

Question 11

Looking at U.S.economic history between 1964 and 2009,we see that growth in real GDP

Accepted Answer

A)  was not correlated with fluctuations in productivity growth. 
B)  falls following an increase in productivity growth. 
C)  rises following an increase in productivity growth. 
D)  rises following a decrease in productivity growth. 
A)  was not correlated with fluctuations in productivity growth. 
B)  falls following an increase in productivity growth. 
C)  rises following an increase in productivity growth. 
D)  rises following a decrease in productivity growth.

Question 12

Demand-pull inflation occurs when

Accepted Answer

A)  aggregate demand increases persistently. 
B)  aggregate supply and aggregate demand decrease persistently. 
C)  the government increases its expenditures. 
D)  oil prices increase substantially. 
A)  aggregate demand increases persistently. 
B)  aggregate supply and aggregate demand decrease persistently. 
C)  the government increases its expenditures. 
D)  oil prices increase substantially.

Question 13

-In the above figure,the economy is at point A.An increase in oil prices occurs after which the Fed responds by increasing the quantity of money.The economy moves from point A to

Accepted Answer

A)  D to point C. 
B)  B to point C. 
C)  C to point D. 
D)  C to point B. 
A)  D to point C. 
B)  B to point C. 
C)  C to point D. 
D)  C to point B.

Question 14

The long-run Phillips curve is

Accepted Answer

A)  vertical at potential GDP. 
B)  the horizontal sum of the short-run Phillips curves. 
C)  vertical at the natural unemployment rate. 
D)  the vertical sum of the short-run Phillips curves. 
A)  vertical at potential GDP. 
B)  the horizontal sum of the short-run Phillips curves. 
C)  vertical at the natural unemployment rate. 
D)  the vertical sum of the short-run Phillips curves.

Question 15

A movement along the SAS curve that brings a lower price level and a decrease in real GDP is equivalent to a

Accepted Answer

A)  movement along a short-run Phillips curve that brings a decrease in the inflation rate and an increase in the unemployment rate. 
B)  movement along a short-run Phillips curve that brings an increase in the inflation rate and an increase in the unemployment rate. 
C)  shift in the short-run Phillips curve that brings a decrease in the inflation rate and an increase in the unemployment rate. 
D)  shift in the short-run Phillips curve that brings an increase in the inflation rate and an increase in the unemployment rate. 
A)  movement along a short-run Phillips curve that brings a decrease in the inflation rate and an increase in the unemployment rate. 
B)  movement along a short-run Phillips curve that brings an increase in the inflation rate and an increase in the unemployment rate. 
C)  shift in the short-run Phillips curve that brings a decrease in the inflation rate and an increase in the unemployment rate. 
D)  shift in the short-run Phillips curve that brings an increase in the inflation rate and an increase in the unemployment rate.

Question 16

Over the last several years,the money supply in Indonesia as increased by 9 percent in 2003 to 14 percent in 2005 and 23 percent in 2007. At the same time,real GDP has grown steadily at over 4 percent annually. These changes would be shown as
I. rightward shifts of the AD curve
II. a movement down along the short-run Phillips curve
III. rightward shifts of the LAS curve

Accepted Answer

A)  I and III. 
B)  I, II and III. 
C)  II only. 
D)  I only. 
A)  I and III. 
B)  I, II and III. 
C)  II only. 
D)  I only.

Question 17

In the long run,what is the tradeoff between inflation and unemployment?
Explain your answer using Phillips curve analysis.

Accepted Answer

In the long run,there is no tradeoff bet

Question 18

A demand-pull inflation occurred in the United States during most of the later part of the

Accepted Answer

A)  1960s. 
B)  2000s. 
C)  1980s. 
D)  1990s. 
A)  1960s. 
B)  2000s. 
C)  1980s. 
D)  1990s.

Question 19

A larger than expected increase in aggregate demand will lead to ________ in the ________ of the business cycle.

Accepted Answer

A)  a recession; new Keynesian cycle theory 
B)  a recession; Keynesian cycle theory 
C)  an expansion; new classical cycle theory 
D)  an expansion; real business cycle theory 
A)  a recession; new Keynesian cycle theory 
B)  a recession; Keynesian cycle theory 
C)  an expansion; new classical cycle theory 
D)  an expansion; real business cycle theory

Question 20

The short-run Phillips curve intersects the long-run Phillips curve at the actual inflation rate.

Accepted Answer

A) True 
 B)False

What is the Phillips curve? Discuss both the short-run and long-run Phillips curve.

If the unemployment rate initially equals its natural rate,then if the inflation rate rises above its expected rate,the unemployment rate ________.

A decrease in the expected inflation rate shifts the short-run Phillips curve

During a cost-push inflation spiral,the money wage rate and the quantity of money .

The government estimates that the natural unemployment rate has increased from 4.8 percent in 2006 to 5.2 percent in late 2012.If these estimates are accurate,the short-run Phillips curve has ________.

Both the new classical and new Keynesian business cycle theories agree that

The early 1990s were the last period of substantial demand-pull inflation in the U.S.

An increase in the expected inflation rate shifts

Which of the following statements about a cost-push inflation is correct?

Cost-push inflation starts with

Looking at U.S.economic history between 1964 and 2009,we see that growth in real GDP

Demand-pull inflation occurs when

-In the above figure,the economy is at point A.An increase in oil prices occurs after which the Fed responds by increasing the quantity of money.The economy moves from point A to

The long-run Phillips curve is

A movement along the SAS curve that brings a lower price level and a decrease in real GDP is equivalent to a

In the long run,what is the tradeoff between inflation and unemployment? Explain your answer using Phillips curve analysis.

A demand-pull inflation occurred in the United States during most of the later part of the

A larger than expected increase in aggregate demand will lead to in the of the business cycle.

The short-run Phillips curve intersects the long-run Phillips curve at the actual inflation rate.

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, The Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

Exam 12: Inflation, Jobs, and the Business Cycle

What is the Phillips curve? Discuss both the short-run and long-run Phillips curve.

If the unemployment rate initially equals its natural rate,then if the inflation rate rises above its expected rate,the unemployment rate ________.

A decrease in the expected inflation rate shifts the short-run Phillips curve

During a cost-push inflation spiral,the money wage rate ________ and the quantity of money ________.

The government estimates that the natural unemployment rate has increased from 4.8 percent in 2006 to 5.2 percent in late 2012.If these estimates are accurate,the short-run Phillips curve has ________.

Both the new classical and new Keynesian business cycle theories agree that

The early 1990s were the last period of substantial demand-pull inflation in the U.S.

An increase in the expected inflation rate shifts

Which of the following statements about a cost-push inflation is correct?

Cost-push inflation starts with

Looking at U.S.economic history between 1964 and 2009,we see that growth in real GDP

Demand-pull inflation occurs when

-In the above figure,the economy is at point A.An increase in oil prices occurs after which the Fed responds by increasing the quantity of money.The economy moves from point A to

The long-run Phillips curve is

A movement along the SAS curve that brings a lower price level and a decrease in real GDP is equivalent to a

In the long run,what is the tradeoff between inflation and unemployment? Explain your answer using Phillips curve analysis.

A demand-pull inflation occurred in the United States during most of the later part of the

A larger than expected increase in aggregate demand will lead to ________ in the ________ of the business cycle.

The short-run Phillips curve intersects the long-run Phillips curve at the actual inflation rate.

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, The Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

During a cost-push inflation spiral,the money wage rate and the quantity of money .

A larger than expected increase in aggregate demand will lead to in the of the business cycle.