Exam 28: Inflation, Unemployment, and Federal Reserve Policy

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

If the Fed attempts to reach and maintain very low rates of unemployment, we would expect the rate of inflation to rise.

In the 1960s, many economists and policy makers considered the trade-off between inflation and unemployment revealed in the Phillips curve to be permanent. This belief was challenged by ________, who argued that there is no trade-off between inflation and unemployment in the long run.

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

The natural rate of unemployment is fixed and unchanging.

During which of the following time periods did inflation remain above 5 percent every year?

Which of the following could decrease unemployment and inflation simultaneously?

The long-run aggregate supply curve is ________, while the long-run Phillips curve is ________.

Figure 28-2 -Refer to Figure 28-2. Suppose the economy is at point C. If the Fed decreases the money supply so that inflation falls, the economy will ________ in the long run, holding all else constant.

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?

With which of the following statements would a "real business cycle" theorist most closely agree?

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

Figure 28-2 -Refer to Figure 28-2. At which point is the unemployment rate equal to the natural rate of unemployment?

According to the ________ Phillips curve, the unemployment rate and the inflation rate are negatively related.

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

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

If expected inflation rises, the long-run Phillips curve will

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

An increase in the expected inflation rate will

Monetary policy can