Question 1

If the short-run Phillips curve has shifted downward, the _____ curve has shifted to the _____.

Accepted Answer

A) SRAS; left 
B) SRAS; right 
C) AD; left 
D) AD; right 
A) SRAS; left 
B) SRAS; right 
C) AD; left 
D) AD; right

Question 2

If the real money supply is $500 billion and the money supply grows by 2%, then real seignorage is:

Accepted Answer

A) $25 trillion. 
B) $1 trillion. 
C) $10 billion. 
D) $1 billion. 
A) $25 trillion. 
B) $1 trillion. 
C) $10 billion. 
D) $1 billion.

Question 3

Irving Fisher described debt deflation as:

Accepted Answer

A) increasing aggregate demand and improving the economic downturn, leading to less deflation. 
B) reducing aggregate demand and worsening the economic downturn, leading to further deflation. 
C) reducing the debt obligation of borrowers as they become better off under deflation. 
D) hurting lenders by reducing the value of their loans and lowering the interest rate on loan. 
A) increasing aggregate demand and improving the economic downturn, leading to less deflation. 
B) reducing aggregate demand and worsening the economic downturn, leading to further deflation. 
C) reducing the debt obligation of borrowers as they become better off under deflation. 
D) hurting lenders by reducing the value of their loans and lowering the interest rate on loan.

Question 4

The measure used by the Fed that excludes food and energy prices is the:

Accepted Answer

A) consumer price index. 
B) wholesale price index. 
C) core inflation rate. 
D) federal funds rate. 
A) consumer price index. 
B) wholesale price index. 
C) core inflation rate. 
D) federal funds rate.

Question 5

The MOST important factors affecting the rate of inflation are:

Accepted Answer

A) expected inflation and the real growth rate. 
B) the unemployment rate and expected inflation. 
C) the real growth rate and the unemployment rate. 
D) fiscal policy effects and the presence of liquidity traps. 
A) expected inflation and the real growth rate. 
B) the unemployment rate and expected inflation. 
C) the real growth rate and the unemployment rate. 
D) fiscal policy effects and the presence of liquidity traps.

Question 6

In the classical model, it is thought that the long-run:

Accepted Answer

A) and short-run aggregate supply curves are both upward sloping. 
B) aggregate supply curve is vertical and the short-run aggregate supply curve is upward sloping. 
C) and short-run aggregate supply curves are both vertical. 
D) aggregate supply curve is upward sloping and the short-run aggregate supply curve is vertical. 
A) and short-run aggregate supply curves are both upward sloping. 
B) aggregate supply curve is vertical and the short-run aggregate supply curve is upward sloping. 
C) and short-run aggregate supply curves are both vertical. 
D) aggregate supply curve is upward sloping and the short-run aggregate supply curve is vertical.

Question 7

Explain why the classical model of the price level is more accurate during high inflation than low inflation.

Accepted Answer

The classical model of the price level p

Question 8

Use the following to answer questions :
Figure: Expected Inflation and the Short-Run Phillips Curve
SRPCS1U1B10S1U1B0 is the Phillips curve with an expected inflation rate of zero; SRPCS1U1B12S1U1B0 is the Phillips curve with an expected inflation rate of 2%.  
-(Figure: Expected Inflation and the Short-Run Phillips Curve) Look at the figure Expected Inflation and the Short-Run Phillips Curve. Suppose that this economy has an unemployment rate of 6%, inflation of 2%, and an expectation of 2% inflation. If the central bank increases the money supply such that aggregate demand shifts to the right and unemployment falls to 4%, then inflation will:

Accepted Answer

A) fall to -2%. 
B) not change. 
C) rise to 2%. 
D) rise to 4%. 
A) fall to -2%. 
B) not change. 
C) rise to 2%. 
D) rise to 4%.

Question 9

Use the following to answer questions :
Figure: Actual and Natural Rates of Unemployment  
-(Figure: Actual and Natural Rates of Unemployment) Look at the figure Actual and Natural Rates of Unemployment. In 2014, the actual unemployment rate was approximately:

Accepted Answer

A) zero. 
B) 3%. 
C) 5%. 
D) 6%. 
A) zero. 
B) 3%. 
C) 5%. 
D) 6%.

Question 10

Zimbabwe's economic instability was caused primarily by:

Accepted Answer

A) its joining the Coalition of the Willing in the Iraq war. 
B) its attempts to join the European Union. 
C) the government's seizure of the country's farms, which disrupted production. 
D) its high tariffs on imported goods. 
A) its joining the Coalition of the Willing in the Iraq war. 
B) its attempts to join the European Union. 
C) the government's seizure of the country's farms, which disrupted production. 
D) its high tariffs on imported goods.

Question 11

The classical model of the price level is more accurate during low inflation than high inflation.

Accepted Answer

A) True 
 B)False

Question 12

Okun's law is less than a 1:1 ratio because some:

Accepted Answer

A) employers quickly lay off workers. 
B) employers change the working hours of current employees as demand changes. 
C) employees act to job share. 
D) workers are not counted as unemployed when they are actively seeking work. 
A) employers quickly lay off workers. 
B) employers change the working hours of current employees as demand changes. 
C) employees act to job share. 
D) workers are not counted as unemployed when they are actively seeking work.

Question 13

The NAIRU is:

Accepted Answer

A) the inflation rate at which the unemployment rate does not change over time. 
B) a trade-off between unemployment and inflation. 
C) the unemployment rate at which inflation does not change over time. 
D) a rate at which it is possible to achieve lower unemployment by accepting higher inflation. 
A) the inflation rate at which the unemployment rate does not change over time. 
B) a trade-off between unemployment and inflation. 
C) the unemployment rate at which inflation does not change over time. 
D) a rate at which it is possible to achieve lower unemployment by accepting higher inflation.

Question 14

People can avoid the inflation tax by reducing their real money balances.

Accepted Answer

A) True 
 B)False

Question 15

The unemployment rate will fall if potential output growth is:

Accepted Answer

A) higher than actual output growth. 
B) lower than actual output growth. 
C) equal to actual output growth. 
D) higher than the inflation rate. 
A) higher than actual output growth. 
B) lower than actual output growth. 
C) equal to actual output growth. 
D) higher than the inflation rate.

Question 16

Use the following to answer questions :
Figure: Short-Run Phillips Curve  
-(Figure: Short-Run Phillips Curve) Look at the figure Short-Run Phillips Curve. SRPC1 is based on an expected inflation rate of:

Accepted Answer

A) zero. 
B) 1%. 
C) 2%. 
D) 3%. 
A) zero. 
B) 1%. 
C) 2%. 
D) 3%.

Question 17

If the Fed reduces the inflation rate from 5% to 3%, it is:

Accepted Answer

A) following a policy rule. 
B) engaging in disinflation. 
C) increasing employment. 
D) raising economic growth. 
A) following a policy rule. 
B) engaging in disinflation. 
C) increasing employment. 
D) raising economic growth.

Question 18

Suppose that the public expects inflation to increase from 3% to 4% this year. How will this affect the short-run Phillips curve?

Accepted Answer

If the public expects a higher inflation

Question 19

As a consequence of the existence of a nonaccelerating inflation rate of unemployment:

Accepted Answer

A) cyclical unemployment can never be zero. 
B) there is no short-run trade-off between unemployment and inflation. 
C) money is neutral. 
D) there is no long-run trade-off between unemployment and inflation. 
A) cyclical unemployment can never be zero. 
B) there is no short-run trade-off between unemployment and inflation. 
C) money is neutral. 
D) there is no long-run trade-off between unemployment and inflation.

Question 20

Which of the following accurately describes disinflation?

Accepted Answer

A) It must be accompanied by a decline in the price level. 
B) The inflation rate rises at a higher rate. 
C) It is reduction of the inflation that has become embedded in expectations. 
D) It is a gradual reduction in the price level over time. 
A) It must be accompanied by a decline in the price level. 
B) The inflation rate rises at a higher rate. 
C) It is reduction of the inflation that has become embedded in expectations. 
D) It is a gradual reduction in the price level over time.

If the short-run Phillips curve has shifted downward, the _ curve has shifted to the _.

If the real money supply is $500 billion and the money supply grows by 2%, then real seignorage is:

Irving Fisher described debt deflation as:

The measure used by the Fed that excludes food and energy prices is the:

The MOST important factors affecting the rate of inflation are:

In the classical model, it is thought that the long-run:

Explain why the classical model of the price level is more accurate during high inflation than low inflation.

Use the following to answer questions : Figure: Actual and Natural Rates of Unemployment -(Figure: Actual and Natural Rates of Unemployment) Look at the figure Actual and Natural Rates of Unemployment. In 2014, the actual unemployment rate was approximately:

Zimbabwe's economic instability was caused primarily by:

The classical model of the price level is more accurate during low inflation than high inflation.

Okun's law is less than a 1:1 ratio because some:

The NAIRU is:

People can avoid the inflation tax by reducing their real money balances.

The unemployment rate will fall if potential output growth is:

Use the following to answer questions : Figure: Short-Run Phillips Curve -(Figure: Short-Run Phillips Curve) Look at the figure Short-Run Phillips Curve. SRPC₁ is based on an expected inflation rate of:

If the Fed reduces the inflation rate from 5% to 3%, it is:

Suppose that the public expects inflation to increase from 3% to 4% this year. How will this affect the short-run Phillips curve?

As a consequence of the existence of a nonaccelerating inflation rate of unemployment:

Which of the following accurately describes disinflation?

First Principles

Economic Models

Supply and Demand

International Trade 5

Macroeconomics: the Big Picture

Gdp and Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Crises and Consequences

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters

Exam 16: Inflation, Disinflation, and Deflation

If the short-run Phillips curve has shifted downward, the _____ curve has shifted to the _____.

If the real money supply is $500 billion and the money supply grows by 2%, then real seignorage is:

Irving Fisher described debt deflation as:

The measure used by the Fed that excludes food and energy prices is the:

The MOST important factors affecting the rate of inflation are:

In the classical model, it is thought that the long-run:

Explain why the classical model of the price level is more accurate during high inflation than low inflation.

Use the following to answer questions : Figure: Actual and Natural Rates of Unemployment -(Figure: Actual and Natural Rates of Unemployment) Look at the figure Actual and Natural Rates of Unemployment. In 2014, the actual unemployment rate was approximately:

Zimbabwe's economic instability was caused primarily by:

The classical model of the price level is more accurate during low inflation than high inflation.

Okun's law is less than a 1:1 ratio because some:

The NAIRU is:

People can avoid the inflation tax by reducing their real money balances.

The unemployment rate will fall if potential output growth is:

Use the following to answer questions : Figure: Short-Run Phillips Curve -(Figure: Short-Run Phillips Curve) Look at the figure Short-Run Phillips Curve. SRPC1 is based on an expected inflation rate of:

If the Fed reduces the inflation rate from 5% to 3%, it is:

Suppose that the public expects inflation to increase from 3% to 4% this year. How will this affect the short-run Phillips curve?

As a consequence of the existence of a nonaccelerating inflation rate of unemployment:

Which of the following accurately describes disinflation?

First Principles

Economic Models

Supply and Demand

International Trade 5

Macroeconomics: the Big Picture

Gdp and Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Crises and Consequences

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters

If the short-run Phillips curve has shifted downward, the _ curve has shifted to the _.

Use the following to answer questions : Figure: Short-Run Phillips Curve -(Figure: Short-Run Phillips Curve) Look at the figure Short-Run Phillips Curve. SRPC₁ is based on an expected inflation rate of: