Question 1

In the long run inflation

Accepted Answer

A)  and unemployment are primarily determined by labor market factors. 
B)  and unemployment are primarily determined by the rate of money supply growth. 
C)  is primarily determined by the rate of money supply growth while unemployment is primarily determined by labor market factors. 
D)  is primarily determined by labor market factors while unemployment is primarily determined by the rate of money supply growth. 
A)  and unemployment are primarily determined by labor market factors. 
B)  and unemployment are primarily determined by the rate of money supply growth. 
C)  is primarily determined by the rate of money supply growth while unemployment is primarily determined by labor market factors. 
D)  is primarily determined by labor market factors while unemployment is primarily determined by the rate of money supply growth.

Question 2

In the late 1970s,proponents of rational expectations argued that

Accepted Answer

A)  the Fed should not attempt to aggressively fight inflation. 
B)  the sacrifice ratio was smaller than previously thought. 
C)  the short run was relatively long. 
D)  None of the above is correct. 
A)  the Fed should not attempt to aggressively fight inflation. 
B)  the sacrifice ratio was smaller than previously thought. 
C)  the short run was relatively long. 
D)  None of the above is correct.

Question 3

In 1980,the U.S.misery index was

Accepted Answer

A)  much higher than average. 
B)  slightly higher than average. 
C)  about average. 
D)  below average. 
A)  much higher than average. 
B)  slightly higher than average. 
C)  about average. 
D)  below average.

Question 4

As an economist working for a U.S.government agency you determine that a particular country has a sacrifice ratio of 3.Policy-makers in that country are thinking of lowering the inflation rate from 10% to 4%.Is this sacrifice ratio higher or lower than the typical estimate? From your numbers,what is the amount of output that will be lost for this country to reduce its inflation rate?

Accepted Answer

A)  The sacrifice ratio is higher than the typical estimate.It will cost 30% of annual output to reach the new inflation target. 
B)  The sacrifice ratio is higher than the typical estimate.It will cost 18% of annual output to reach the new inflation target. 
C)  The sacrifice ratio is lower than the typical estimate.It will cost 30% of annual output to reach the new inflation target. 
D)  The sacrifice ratio is lower than the typical estimate.It will cost 18% of annual output to reach the new inflation target. 
A)  The sacrifice ratio is higher than the typical estimate.It will cost 30% of annual output to reach the new inflation target. 
B)  The sacrifice ratio is higher than the typical estimate.It will cost 18% of annual output to reach the new inflation target. 
C)  The sacrifice ratio is lower than the typical estimate.It will cost 30% of annual output to reach the new inflation target. 
D)  The sacrifice ratio is lower than the typical estimate.It will cost 18% of annual output to reach the new inflation target.

Question 5

If inflation expectations rise,the short-run Phillips curve shifts

Accepted Answer

A)  left.If inflation remains the same,unemployment falls. 
B)  left.If inflation remains the same,unemployment rises. 
C)  right.If inflation remains the same,unemployment falls. 
D)  right.If inflation remains the same,unemployment rises. 
A)  left.If inflation remains the same,unemployment falls. 
B)  left.If inflation remains the same,unemployment rises. 
C)  right.If inflation remains the same,unemployment falls. 
D)  right.If inflation remains the same,unemployment rises.

Question 6

An increase in the natural rate of unemployment shifts the long-run Phillips curve to the right.

Accepted Answer

A) True 
 B)False

Exam 35: The Short-Run Trade-Off Between Inflation and Unemployment

In the long run inflation

In the late 1970s,proponents of rational expectations argued that

In 1980,the U.S.misery index was

If inflation expectations rise,the short-run Phillips curve shifts

An increase in the natural rate of unemployment shifts the long-run Phillips curve to the right.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

Five Debates Over Macroeconomic Policy

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