Question 1

According to Friedman and Phelps,policymakers face a tradeoff between inflation and unemployment

Accepted Answer

A)  only in the long run. 
B)  only in the short run. 
C)  in neither the long run nor short run. 
D)  in both the short run and long run. 
A)  only in the long run. 
B)  only in the short run. 
C)  in neither the long run nor short run. 
D)  in both the short run and long run.

Question 2

The Phillips curve and the short-run aggregate supply curve are closely related,yet one slopes downward and the other slopes upward.Discuss.

Accepted Answer

The Phillips curve shows the relation be

Question 3

In the long run,a decrease in the money supply growth rate

Accepted Answer

A)  shifts the short-run Phillips curve left so inflation returns to its original rate. 
B)  shifts the short-run Phillips curve left so unemployment returns to its natural rate. 
C)  Both A and B are correct. 
D)  None of the above is correct. 
A)  shifts the short-run Phillips curve left so inflation returns to its original rate. 
B)  shifts the short-run Phillips curve left so unemployment returns to its natural rate. 
C)  Both A and B are correct. 
D)  None of the above is correct.

Question 4

In the long run,

Accepted Answer

A)  the natural rate of unemployment depends primarily on the level of aggregate demand. 
B)  inflation depends primarily upon the money supply growth rate. 
C)  there is a tradeoff between the inflation rate and the natural rate of unemployment. 
D)  All of the above are correct. 
A)  the natural rate of unemployment depends primarily on the level of aggregate demand. 
B)  inflation depends primarily upon the money supply growth rate. 
C)  there is a tradeoff between the inflation rate and the natural rate of unemployment. 
D)  All of the above are correct.

Question 5

If the Federal Reserve increases the growth rate of the money supply,in the long run

Accepted Answer

A)  inflation is higher and the unemployment rate is lower. 
B)  inflation is higher while the unemployment rate is unchanged. 
C)  inflation is unchanged while the unemployment rate is lower. 
D)  None of the above is correct. 
A)  inflation is higher and the unemployment rate is lower. 
B)  inflation is higher while the unemployment rate is unchanged. 
C)  inflation is unchanged while the unemployment rate is lower. 
D)  None of the above is correct.

Question 6

Which of the following would tend to shorten recessions associated with anti-inflation policies by central banks?

Accepted Answer

A)  People adjust their expectations of inflation rapidly. 
B)  People believe policy announcements made by Fed officials. 
C)  The short-run Phillips shifts rapidly. 
D)  All of the above are correct. 
A)  People adjust their expectations of inflation rapidly. 
B)  People believe policy announcements made by Fed officials. 
C)  The short-run Phillips shifts rapidly. 
D)  All of the above are correct.

Question 7

Explain the connection between the vertical long-run aggregate supply curve and the vertical long-run Phillips curve.

Accepted Answer

Both reflect the classical dichotomy.The

Question 8

Suppose the Federal Reserve makes monetary policy more expansionary.In the long run

Accepted Answer

A)  both inflation and the unemployment rate are higher than they were prior to the change in policy. 
B)  inflation is higher and the unemployment rate is the same as it was prior to the change in policy. 
C)  inflation is lower and the unemployment rate is lower than it was prior to the change in policy. 
D)  inflation is lower and unemployment is the same as it was prior to the change in policy. 
A)  both inflation and the unemployment rate are higher than they were prior to the change in policy. 
B)  inflation is higher and the unemployment rate is the same as it was prior to the change in policy. 
C)  inflation is lower and the unemployment rate is lower than it was prior to the change in policy. 
D)  inflation is lower and unemployment is the same as it was prior to the change in policy.

Question 9

Samuelson and Solow argued that when unemployment is high,there is

Accepted Answer

A)  upward pressures on wages and prices. 
B)  upward pressures on wages and downward pressures on prices. 
C)  upward pressures on prices and downward pressures on wages. 
D)  downward pressures on wages and prices. 
A)  upward pressures on wages and prices. 
B)  upward pressures on wages and downward pressures on prices. 
C)  upward pressures on prices and downward pressures on wages. 
D)  downward pressures on wages and prices.

Question 10

Over the long run the Volcker disinflation

Accepted Answer

A)  shifted the short-run and long-run Phillips curves left. 
B)  shifted the short-run,but not the long-run Phillips curve left. 
C)  shifted the long-run,but not the short-run Phillips curve left. 
D)  None of the above is correct. 
A)  shifted the short-run and long-run Phillips curves left. 
B)  shifted the short-run,but not the long-run Phillips curve left. 
C)  shifted the long-run,but not the short-run Phillips curve left. 
D)  None of the above is correct.

Question 11

Are the effects of an increase in aggregate demand in the aggregate demand and aggregate supply model consistent with the Phillips curve? Explain.

Accepted Answer

Consider what happens when the aggregate

Question 12

If expected inflation increases,which of the following shifts right?

Accepted Answer

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

Question 13

An increase in expected inflation shifts the

Accepted Answer

A)  short-run Phillips curve right. 
B)  short-run Phillips curve left. 
C)  long-run Phillips curve right. 
D)  long-run Phillips curve left. 
A)  short-run Phillips curve right. 
B)  short-run Phillips curve left. 
C)  long-run Phillips curve right. 
D)  long-run Phillips curve left.

Question 14

Most economists believe that a tradeoff between inflation and unemployment exists

Accepted Answer

A)  only in the short run. 
B)  only in the long run. 
C)  in both the short and long run. 
D)  in neither the short nor long run. 
A)  only in the short run. 
B)  only in the long run. 
C)  in both the short and long run. 
D)  in neither the short nor long run.

Question 15

In 1979,Fed Chair Paul Volcker

Accepted Answer

A)  instituted an accommodative monetary policy to address adverse supply shocks. 
B)  believed that inflation had not yet reached unacceptable levels. 
C)  believed decreasing inflation would temporarily decrease output growth. 
D)  All of the above are correct. 
A)  instituted an accommodative monetary policy to address adverse supply shocks. 
B)  believed that inflation had not yet reached unacceptable levels. 
C)  believed decreasing inflation would temporarily decrease output growth. 
D)  All of the above are correct.

Question 16

Samuelson and Solow believed that the Phillips curve

Accepted Answer

A)  implied that low unemployment was associated with low inflation. 
B)  indicated that the aggregate supply and aggregate demand model was incorrect. 
C)  offered policymakers a menu of possible economic outcomes from which to choose. 
D)  All of the above are correct. 
A)  implied that low unemployment was associated with low inflation. 
B)  indicated that the aggregate supply and aggregate demand model was incorrect. 
C)  offered policymakers a menu of possible economic outcomes from which to choose. 
D)  All of the above are correct.

Question 17

A.W.Phillips' findings were based on data

Accepted Answer

A)  from 1861-1957 for the United Kingdom. 
B)  from 1861-1957 for the United States. 
C)  mostly from the post-World War II period in the United Kingdom. 
D)  mostly from the post-World War II period in the United States. 
A)  from 1861-1957 for the United Kingdom. 
B)  from 1861-1957 for the United States. 
C)  mostly from the post-World War II period in the United Kingdom. 
D)  mostly from the post-World War II period in the United States.

Question 18

Figure 35-5
Use the two graphs in the diagram to answer the following questions.    
-Refer to Figure 35-5.The economy would move from 3 to 5

Accepted Answer

A)  in the short run if money supply growth increased unexpectedly. 
B)  in the short run if money supply growth decreased unexpectedly. 
C)  in the long run if money supply growth increases. 
D)  in the long run if money supply growth decreases. 
A)  in the short run if money supply growth increased unexpectedly. 
B)  in the short run if money supply growth decreased unexpectedly. 
C)  in the long run if money supply growth increases. 
D)  in the long run if money supply growth decreases.

Question 19

Figure
The Economy in 2008
In the first half of June 2008 the effects of a housing and financial crisis and an increase in world prices of oil and foodstuffs were impacting the economy.
-Refer to The Economy in 2008.The effects of the housing and financial crises could be shown by shifting

Accepted Answer

A)  aggregate demand to the right. 
B)  aggregate demand to the left. 
C)  aggregate supply to the right. 
D)  aggregate supply to the left. 
A)  aggregate demand to the right. 
B)  aggregate demand to the left. 
C)  aggregate supply to the right. 
D)  aggregate supply to the left.

Question 20

Considering a plot of the inflation rate and the unemployment rate,one might conjecture that the short run Phillips curve was further to the right in the first part of the 2000's than it was in the last part of the 1990s and 2000.

Accepted Answer

A)  If so,this might have been the result of a negative supply shock or an increase in expected inflation. 
B)  If so,this might been the result of a negative supply shock,or a decrease in expected inflation. 
C)  If so,this might have been the result of a positive supply shock,or an increase in expected inflation. 
D)  If so,this might have been the result of a positive supply shock,or a decrease in expected inflation. 
A)  If so,this might have been the result of a negative supply shock or an increase in expected inflation. 
B)  If so,this might been the result of a negative supply shock,or a decrease in expected inflation. 
C)  If so,this might have been the result of a positive supply shock,or an increase in expected inflation. 
D)  If so,this might have been the result of a positive supply shock,or a decrease in expected inflation.

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

According to Friedman and Phelps,policymakers face a tradeoff between inflation and unemployment

The Phillips curve and the short-run aggregate supply curve are closely related,yet one slopes downward and the other slopes upward.Discuss.

In the long run,a decrease in the money supply growth rate

In the long run,

If the Federal Reserve increases the growth rate of the money supply,in the long run

Which of the following would tend to shorten recessions associated with anti-inflation policies by central banks?

Explain the connection between the vertical long-run aggregate supply curve and the vertical long-run Phillips curve.

Suppose the Federal Reserve makes monetary policy more expansionary.In the long run

Samuelson and Solow argued that when unemployment is high,there is

Over the long run the Volcker disinflation

Are the effects of an increase in aggregate demand in the aggregate demand and aggregate supply model consistent with the Phillips curve? Explain.

If expected inflation increases,which of the following shifts right?

An increase in expected inflation shifts the

Most economists believe that a tradeoff between inflation and unemployment exists

In 1979,Fed Chair Paul Volcker

Samuelson and Solow believed that the Phillips curve

A.W.Phillips' findings were based on data

Figure 35-5 Use the two graphs in the diagram to answer the following questions. -Refer to Figure 35-5.The economy would move from 3 to 5

Figure The Economy in 2008 In the first half of June 2008 the effects of a housing and financial crisis and an increase in world prices of oil and foodstuffs were impacting the economy. -Refer to The Economy in 2008.The effects of the housing and financial crises could be shown by shifting

Considering a plot of the inflation rate and the unemployment rate,one might conjecture that the short run Phillips curve was further to the right in the first part of the 2000's than it was in the last part of the 1990s and 2000.

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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