Exam 17: Inflation, Unemployment, and Federal Reserve Policy

The long-run Phillips curve is ________ than the short-run Phillips curve.

According to economists Robert Lucas and Thomas Sargent,the apparent short-run trade-off between unemployment and inflation in the 1950s and 1960s was the result of

If workers and firms have rational expectations,they understand that ________ monetary policy will raise the inflation rate,so actual inflation ________ expected inflation.

Evidence shows that for many people,delaying searching for a job for a year or longer after they are laid off will contribute to a deterioration of their job skills,making it harder for them to find employment.This deterioration in job skills and the subsequent retraining that is necessary to obtain employment relates to which type of unemployment?

If the Federal Reserve chooses to fight high inflation with contractionary monetary policy and firms and consumers expect this policy to reduce inflation,which of the following would you expect to see?

The curve showing the short-run relationship between the ________ and the ________ is called the Phillips curve.

Monetary policy has ________ impact on the long-run Phillips curve.

Figure 17-6 -Refer to Figure 17-6.If firms and workers have rational expectations,an expansionary monetary policy will cause the short-run equilibrium to move from

If strong aggregate demand is pushing the economy beyond potential real GDP,which of the following must be true?

What is the relationship between the short-run Phillips curve and the long-run Phillips curve?

If unemployment persists for a long period of time,the natural rate of unemployment rises.

Some economists argue that the short-run Phillips curve is not vertical,and that monetary policy can be effective in the short run.Which one of the following is not one of the reasons for this skepticism?

If rational workers and firms know that the Federal Reserve is following a contractionary monetary policy,they will expect inflation to ________ and will adjust wages so that the real wage ________.

Figure 17-2 -Refer to Figure 17-2.Suppose the Fed used expansionary policy to push short-run equilibrium to point B.If the short-run equilibrium remained at point B long enough

An increase in the expected inflation rate will

In the short run,the Federal Reserve can affect which of the following?

Which of the following is not an appropriate policy for a central bank to follow if the economy is plagued with deflation?

Figure 17-9 -Refer to Figure 17-9.A follower of the new classical macroeconomics would argue that a contractionary monetary policy to lower inflation after a supply shock,like that pursued by Volcker in 1979,would result in a movement from

When individuals use ________ about an economic variable to make a decision,expectations are rational.

If changes in inflation are higher than expected