Exam 17: Inflation, unemployment, and Federal Reserve Policy

If the Fed decided to reverse its policy actions implemented during the heart of the recession,the Fed would be acting to try to prevent

If changes in inflation are higher than expected,

Evidence shows that many people who delay searching for a job for a year or longer after they are laid off

An increase in expected inflation will shift the short-run Phillips Curve.

A higher inflation rate can lead to lower unemployment if ________ mistakenly expect the inflation rate to be lower than it turns out to be.

The major criticism of real business cycle models is

If workers and firms expect that inflation will be 5 percent next year,and real wages are not changing over time,by how much will nominal wages increase?

Figure 17-2 -Refer to Figure 17-2.Suppose the economy is at point A in the figure above.Which of the following is true?

Last year,the unemployment rate was 4 percent and the inflation rate was 3 percent.If the natural rate of unemployment is 3 percent,how do you expect inflation to change?

If expectations are adaptive,how will the economy adjust to a new long-run equilibrium in response to contractionary monetary policy? Support your answer with a graph of the Phillips curve.

When will an increase in aggregate demand not result in lower unemployment rates in the short run?

A reduction in the rate of inflation is referred to as

The price level in the economy between 2012 and 2013 rose from 100 to 105.Between 2013 and 2014,the price level rose from 105 to 110.25.How does the short-run Phillips curve predict the unemployment rate will change as a result?

Parker Hannifin benefitted when the Federal Reserve slashed the federal funds rate to near-zero levels in 2008.Lower interest rates increased demand for its machinery components,which would allow Parker Hannifin to ________ employment and ________ prices.

If the economy experiences a(n)________,inflation will rise and real GDP will fall.

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 17-7 -Refer to Figure 17-7.Consider the Phillips curves depicted in the graph above.The Fed announces its intention to decrease inflation from 10 percent to 5 percent per year,and it succeeds.If expectations of inflation are reduced to 8 percent by the Fed's announcement,the rate of unemployment will be ________ in the short run.

If actual inflation is greater than expected inflation,what is the relationship between the actual real wage and the expected real wage?

Figure 17-2 -Refer to Figure 17-2.At which point are inflation expectations equal to the actual inflation rate?

If the Federal Reserve attempts to continue reducing unemployment by manipulating monetary policy,which of the following would you expect to see?