Exam 17: Inflation, unemployment, and Federal Reserve Policy

Which of the following could decrease unemployment and inflation simultaneously?

If firms and workers have adaptive expectations,what impact will expansionary monetary policy have on inflation,unemployment,and the Phillips curve?

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

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

The experience of Paul Volcker's fight against inflation during the late 1970s and early 1980s indicates that firms and workers may have

Article Summary In a September 2013 speech to the Independent Bankers Association of Texas, Federal Reserve Bank of Dallas president Richard Fisher stated that the Fed's credibility was harmed when it announced the previous week that it would continue its large bond purchasing program. In June, Fed Chairman Ben Bernanke had stated that that the program could begin to be cut back later in the year, and several other Fed officials expressed being open to the announced timing of this policy. Bernanke's change in his announced timeline of the Fed's intentions regarding the bond purchasing program brought criticism that the Fed had misled investors. In his speech, Fisher stated "I disagreed with the decision of the committee and argued against it. Doing nothing at this meeting would increase uncertainty about the future conduct of policy and call the credibility of our communications into question. I believe that is exactly what has occurred, though I take no pleasure in saying so." Fisher has been a long-time opponent of the Fed's bond purchasing program, claiming it is ineffective and may well lead to future inflation, and had been calling for the Fed to begin phasing out this program in September. Source: "Fisher: Standing pat on policy hurt Fed's credibility," Reuters, September 23, 2013. -Refer to the Article Summary.Richard Fisher brought the Fed's credibility into question when it decided to continue with its bond purchasing program despite leading many to believe that the program would begin to be phased out.Prior to this,over the past two decades whenever a change in Fed policy had been announced,the change has ________ taken place,leading to ________ credibility.

The expansionary monetary and fiscal policies of the 1960s resulted in ________ inflation rates and ________ rates of unemployment.

Where does the short-run Phillips curve intersect the long-run Phillips curve?

In face of a negative supply shock,the Fed may avoid a rise in unemployment only if it is willing to increase the rate of inflation.

All other factors held constant,increased growth in aggregate demand will

Which of the following would be the source of a "real" business cycle?

If weak aggregate demand is pushing the economy into recession,which of the following must be true?

What actions could the Federal Reserve take to achieve consistent growth in real GDP at 4 percent per year?

In the long run,the Phillips curve is a ________ at ________.

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

Under Alan Greenspan,the Fed strived to hit its goals of price stability and high employment through

If the economy is producing ________,unemployment is at its natural rate.

A study conducted by Robert Shiller,a Yale Economist,found that a large majority of the public thinks that increases in inflation will not quickly lead to an increase in wages.

A "long-run exploitable Phillips curve" refers to a Phillips curve that in the long run is ________ rather than ________.

Which of the following would increase the natural rate of unemployment?