Question 1

If a central bank increases the money supply,then

Accepted Answer

A)  prices,output,and unemployment rise. 
B)  prices and output rise and unemployment falls. 
C)  prices rise and output and unemployment fall. 
D)  prices fall and output and unemployment rise. 
A)  prices,output,and unemployment rise. 
B)  prices and output rise and unemployment falls. 
C)  prices rise and output and unemployment fall. 
D)  prices fall and output and unemployment rise.

Question 2

In the long run,an increase in the money supply growth rate

Accepted Answer

A)  shifts both the long-run and the short-run Phillips curves right. 
B)  shifts the long-run Phillips curve left and the short-run Phillips curve right. 
C)  shifts the long-run Phillips curve right and the short-run Phillips curve left. 
D)  None of the above is correct. 
A)  shifts both the long-run and the short-run Phillips curves right. 
B)  shifts the long-run Phillips curve left and the short-run Phillips curve right. 
C)  shifts the long-run Phillips curve right and the short-run Phillips curve left. 
D)  None of the above is correct.

Question 3

If the natural rate of unemployment falls,

Accepted Answer

A)  both the short-run Phillips curve and the long-run Phillips curve shift. 
B)  only the short-run Phillips curve shifts. 
C)  only the long-run Phillips curve shifts. 
D)  neither the short-run nor the long-run Phillips curves shift. 
A)  both the short-run Phillips curve and the long-run Phillips curve shift. 
B)  only the short-run Phillips curve shifts. 
C)  only the long-run Phillips curve shifts. 
D)  neither the short-run nor the long-run Phillips curves shift.

Question 4

The position of the long-run Phillips curve depends on

Accepted Answer

A)  the inflation rate and the natural rate of unemployment. 
B)  the inflation rate but not the natural rate of unemployment. 
C)  the natural rate of unemployment,but not the inflation rate. 
D)  neither the natural rate of unemployment nor the inflation rate. 
A)  the inflation rate and the natural rate of unemployment. 
B)  the inflation rate but not the natural rate of unemployment. 
C)  the natural rate of unemployment,but not the inflation rate. 
D)  neither the natural rate of unemployment nor the inflation rate.

Question 5

A country is likely to have a lower sacrifice ratio if

Accepted Answer

A)  contracts are shorter,and people believe the central bank will reduce inflation. 
B)  contracts are shorter,and people believe the central bank will not reduce inflation 
C)  contracts are longer,and people believe the central bank will reduce inflation 
D)  contracts are longer,and people believe the central bank will reduce inflation . 
A)  contracts are shorter,and people believe the central bank will reduce inflation. 
B)  contracts are shorter,and people believe the central bank will not reduce inflation 
C)  contracts are longer,and people believe the central bank will reduce inflation 
D)  contracts are longer,and people believe the central bank will reduce inflation .

Question 6

In the long run,the natural rate of unemployment depends primarily on the growth rate of the money supply.

Accepted Answer

A) True 
 B)False

Question 7

In 1980,the combination of inflation and unemployment the U.S.was experiencing

Accepted Answer

A)  resulted from a leftward shift of the short-run Phillips curve. 
B)  was consistent with feasible inflation-unemployment combinations provided by the Phillips curve of the 1960s. 
C)  followed two supply shocks that were triggered by the Organization of Petroleum Exporting Countries. 
D)  All of the above are correct. 
A)  resulted from a leftward shift of the short-run Phillips curve. 
B)  was consistent with feasible inflation-unemployment combinations provided by the Phillips curve of the 1960s. 
C)  followed two supply shocks that were triggered by the Organization of Petroleum Exporting Countries. 
D)  All of the above are correct.

Question 8

An increase in expected inflation shifts

Accepted Answer

A)  the long-run Phillips curve right. 
B)  the short-run Phillips curve right. 
C)  neither the short-run nor long-run Phillips curve right. 
D)  both the short-run and long-run Phillips curve right. 
A)  the long-run Phillips curve right. 
B)  the short-run Phillips curve right. 
C)  neither the short-run nor long-run Phillips curve right. 
D)  both the short-run and long-run Phillips curve right.

Question 9

According to the short-run Phillips curve,if the central bank increases the money supply,then

Accepted Answer

A)  inflation and unemployment will both fall. 
B)  inflation and unemployment will both rise. 
C)  inflation will fall and unemployment will rise. 
D)  inflation will rise and unemployment will fall. 
A)  inflation and unemployment will both fall. 
B)  inflation and unemployment will both rise. 
C)  inflation will fall and unemployment will rise. 
D)  inflation will rise and unemployment will fall.

Question 10

Figure 35-3   Refer to figure 35-3.In this order,which curve is a long-run Phillips curve and which is a short-run Phillips curve?
a.
A,B
b.
A,D
c.
C,B
d.
None of the above is correct.
ANS: B DIF: 1 REF: 35-2 NAT: Analytic
LOC: Unemployment and inflation TOP: Short-run Phillips curve | Long-run Phillips curve
MSC: Definitional
-Which of the following is upward sloping?

Accepted Answer

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

Question 11

Figure 35-2
Use the pair of diagrams below to answer the following questions.    
-Refer to Figure 35-2.If the economy starts at C and 1,then in the short run,a decrease in government expenditures moves the economy to

Accepted Answer

A)  D and 2 
B)  D and 3. 
C)  E and 3. 
D)  None of the above is correct. 
A)  D and 2 
B)  D and 3. 
C)  E and 3. 
D)  None of the above is correct.

Question 12

If a central bank wants to counter the change in the price level caused by an adverse supply shock,it could change the money supply to shift

Accepted Answer

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

Question 13

Which of the following would we not expect if government policy moved the economy up along a given short-run Phillips curve?

Accepted Answer

A)  Paul reads in the newspaper that the central bank recently raised the money supply. 
B)  Louisa gets fewer job offers 
C)  Joey makes larger increases in the prices at his health food store. 
D)  Jessica's nominal wage increase is larger. 
A)  Paul reads in the newspaper that the central bank recently raised the money supply. 
B)  Louisa gets fewer job offers 
C)  Joey makes larger increases in the prices at his health food store. 
D)  Jessica's nominal wage increase is larger.

Question 14

Which of the following would cause the price level to rise and output to fall in the short run?

Accepted Answer

A)  an increase in the money supply 
B)  a decrease in the money supply 
C)  an adverse supply shock 
D)  a favorable supply shock 
A)  an increase in the money supply 
B)  a decrease in the money supply 
C)  an adverse supply shock 
D)  a favorable supply shock

Question 15

A policy change that reduces the natural rate of unemployment shifts both the long-run aggregate-supply curve and the long-run Phillips curve left.

Accepted Answer

A) True 
 B)False

Question 16

The short-run Phillips curve indicates that expansionary monetary policy will temporarily raise the unemployment rate above its natural rate.

Accepted Answer

A) True 
 B)False

Question 17

If a central bank decreases the money supply in response to an adverse supply shock,which of the following does its response move back closer to its value before the shock?

Accepted Answer

A)  both the price level and output 
B)  the price level but not output 
C)  output but not the price level 
D)  neither output nor the price level 
A)  both the price level and output 
B)  the price level but not output 
C)  output but not the price level 
D)  neither output nor the price level

Question 18

What did Friedman and Phelps predict would happen if policymakers tried to move the economy upward along the Phillips curve? Did the behavior of the economy in the late 1960s and the 1970s prove them wrong?

Accepted Answer

Friedman and Phelps predicted that,over

Question 19

According to the Friedman-Phelps analysis,in the long run actual inflation equals expected inflation and unemployment is at its natural rate.

Accepted Answer

A) True 
 B)False

Question 20

Milton Friedman and Edmund Phelps argued in the late 1960s that in the long run the Phillips curve is

Accepted Answer

A)  downward-sloping,which implies that monetary and fiscal policies can influence the level of unemployment in the long run. 
B)  downward-sloping,which implies that monetary and fiscal policies cannot influence the rate of inflation in the long run. 
C)  vertical,which implies that monetary and fiscal policies cannot influence the level of unemployment in the long run. 
D)  vertical,which implies that monetary and fiscal policies cannot influence the rate of inflation in the long run. 
A)  downward-sloping,which implies that monetary and fiscal policies can influence the level of unemployment in the long run. 
B)  downward-sloping,which implies that monetary and fiscal policies cannot influence the rate of inflation in the long run. 
C)  vertical,which implies that monetary and fiscal policies cannot influence the level of unemployment in the long run. 
D)  vertical,which implies that monetary and fiscal policies cannot influence the rate of inflation in the long run.

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

If a central bank increases the money supply,then

In the long run,an increase in the money supply growth rate

If the natural rate of unemployment falls,

The position of the long-run Phillips curve depends on

A country is likely to have a lower sacrifice ratio if

In the long run,the natural rate of unemployment depends primarily on the growth rate of the money supply.

In 1980,the combination of inflation and unemployment the U.S.was experiencing

An increase in expected inflation shifts

According to the short-run Phillips curve,if the central bank increases the money supply,then

Figure 35-2 Use the pair of diagrams below to answer the following questions. -Refer to Figure 35-2.If the economy starts at C and 1,then in the short run,a decrease in government expenditures moves the economy to

If a central bank wants to counter the change in the price level caused by an adverse supply shock,it could change the money supply to shift

Which of the following would we not expect if government policy moved the economy up along a given short-run Phillips curve?

Which of the following would cause the price level to rise and output to fall in the short run?

A policy change that reduces the natural rate of unemployment shifts both the long-run aggregate-supply curve and the long-run Phillips curve left.

The short-run Phillips curve indicates that expansionary monetary policy will temporarily raise the unemployment rate above its natural rate.

If a central bank decreases the money supply in response to an adverse supply shock,which of the following does its response move back closer to its value before the shock?

What did Friedman and Phelps predict would happen if policymakers tried to move the economy upward along the Phillips curve? Did the behavior of the economy in the late 1960s and the 1970s prove them wrong?

According to the Friedman-Phelps analysis,in the long run actual inflation equals expected inflation and unemployment is at its natural rate.

Milton Friedman and Edmund Phelps argued in the late 1960s that in the long run the Phillips curve is

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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