Question 1

From 2000 to 2008 Zimbabwe's prices:

Accepted Answer

A) decreased by 50%. 
B) increased by 50%. 
C) increased by 100%. 
D) increased by 80 trillion percent. 
A) decreased by 50%. 
B) increased by 50%. 
C) increased by 100%. 
D) increased by 80 trillion percent.

Question 2

The debt is monetized when:

Accepted Answer

A) the budget is approved by Congress. 
B) the Fed buys back debt via open-market purchases. 
C) the government raises taxes. 
D) transfer payments are decreased. 
A) the budget is approved by Congress. 
B) the Fed buys back debt via open-market purchases. 
C) the government raises taxes. 
D) transfer payments are decreased.

Question 3

The inflation tax is the effect on the public of:

Accepted Answer

A) the increase in the real value of money caused by inflation. 
B) the decrease in the real value of money caused by inflation. 
C) the result of indexing wages to inflation. 
D) cost of living adjustments. 
A) the increase in the real value of money caused by inflation. 
B) the decrease in the real value of money caused by inflation. 
C) the result of indexing wages to inflation. 
D) cost of living adjustments.

Question 4

The long-run Phillips curve is:

Accepted Answer

A) vertical at an unemployment rate equal to the nonaccelerating inflation rate of unemployment (NAIRU). 
B) horizontal at inflation rate equal to NAIRU. 
C) upward sloping, showing that there is no trade-off between unemployment and inflation. 
D) downward sloping, showing that there is a trade-off between unemployment and inflation. 
A) vertical at an unemployment rate equal to the nonaccelerating inflation rate of unemployment (NAIRU). 
B) horizontal at inflation rate equal to NAIRU. 
C) upward sloping, showing that there is no trade-off between unemployment and inflation. 
D) downward sloping, showing that there is a trade-off between unemployment and inflation.

Question 5

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 output gap was:

Accepted Answer

A) positive. 
B) negative. 
C) zero. 
D) impossible to determine without more information. 
A) positive. 
B) negative. 
C) zero. 
D) impossible to determine without more information.

Question 6

Suppose a fall in commodity prices causes a supply shock. The short-run Phillips curve will:

Accepted Answer

A) shift down. 
B) show a movement along the same curve. 
C) not be affected at all. 
D) shift up. 
A) shift down. 
B) show a movement along the same curve. 
C) not be affected at all. 
D) shift up.

Question 7

When the output gap is positive, the unemployment rate is:

Accepted Answer

A) positive. 
B) above the natural rate. 
C) below the natural rate. 
D) negative. 
A) positive. 
B) above the natural rate. 
C) below the natural rate. 
D) negative.

Question 8

The short-run Phillips curve shows:

Accepted Answer

A) a direct relationship between unemployment and inflation. 
B) an inverse relationship between unemployment and inflation. 
C) consequences of the misperceptions theory. 
D) the optimal level of employment. 
A) a direct relationship between unemployment and inflation. 
B) an inverse relationship between unemployment and inflation. 
C) consequences of the misperceptions theory. 
D) the optimal level of employment.

Question 9

An increase in expected inflation will affect the short-run Phillips curve:

Accepted Answer

A) by shifting it downward; the actual rate of inflation at any given unemployment rate will fall by the same amount. 
B) by shifting it upward; the actual rate of inflation at any given unemployment rate will also be higher when the expected inflation rate is higher. 
C) by moving along the same curve, where it equals the actual rate of inflation. 
D) only if the economy is at the nonaccelerating inflation rate of unemployment. 
A) by shifting it downward; the actual rate of inflation at any given unemployment rate will fall by the same amount. 
B) by shifting it upward; the actual rate of inflation at any given unemployment rate will also be higher when the expected inflation rate is higher. 
C) by moving along the same curve, where it equals the actual rate of inflation. 
D) only if the economy is at the nonaccelerating inflation rate of unemployment.

Question 10

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 1982, the natural unemployment rate (structural plus frictional) was approximately:

Accepted Answer

A) zero. 
B) 4%. 
C) 6%. 
D) 10%. 
A) zero. 
B) 4%. 
C) 6%. 
D) 10%.

Question 11

If an administration pursues expansionary policy before an election to bring down unemployment, it can:

Accepted Answer

A) produce inflation only if the real interest rate is zero to begin with. 
B) lower people's expectations about inflation through a sense of false complacency. 
C) produce inflation if the targeted rate of unemployment is too low. 
D) produce disinflation if the expansionary monetary policy is unanticipated. 
A) produce inflation only if the real interest rate is zero to begin with. 
B) lower people's expectations about inflation through a sense of false complacency. 
C) produce inflation if the targeted rate of unemployment is too low. 
D) produce disinflation if the expansionary monetary policy is unanticipated.

Question 12

The inflation tax is equal to:

Accepted Answer

A) inflation multiplied by the demand for money. 
B) inflation multiplied by the nominal money supply. 
C) the money supply divided by the price level. 
D) the nominal money supply divided by inflation. 
A) inflation multiplied by the demand for money. 
B) inflation multiplied by the nominal money supply. 
C) the money supply divided by the price level. 
D) the nominal money supply divided by inflation.

Question 13

Deflation leads to winners and losers; for example:

Accepted Answer

A) mortgage holders lose, but banks awaiting mortgage payments benefit. 
B) landlords lose, but people paying rent gain. 
C) savings account holders lose, but the banks gain. 
D) bond and stock holders lose, but the brokerage company gains. 
A) mortgage holders lose, but banks awaiting mortgage payments benefit. 
B) landlords lose, but people paying rent gain. 
C) savings account holders lose, but the banks gain. 
D) bond and stock holders lose, but the brokerage company gains.

Question 14

A Phillips curve implies a negative relationship between:

Accepted Answer

A) consumption and saving. 
B) inflation and prices. 
C) inflation and unemployment. 
D) consumption and inflation. 
A) consumption and saving. 
B) inflation and prices. 
C) inflation and unemployment. 
D) consumption and inflation.

Question 15

A negative output gap implies an unemployment rate:

Accepted Answer

A) above the natural rate. 
B) below the natural rate. 
C) equal to the natural rate. 
D) that equals the frictional and structural amounts of unemployment. 
A) above the natural rate. 
B) below the natural rate. 
C) equal to the natural rate. 
D) that equals the frictional and structural amounts of unemployment.

Question 16

The natural rate of unemployment is 4%, and the economy is producing 95% of its potential output. Okun's law predicts an unemployment rate of:

Accepted Answer

A) 4%. 
B) 5%. 
C) 6.5%. 
D) 9%. 
A) 4%. 
B) 5%. 
C) 6.5%. 
D) 9%.

Question 17

A negative output gap is associated with a(n) _____ unemployment rate.

Accepted Answer

A) unusually low 
B) natural 
C) unusually high 
D) unchanged 
A) unusually low 
B) natural 
C) unusually high 
D) unchanged

Question 18

Along a Phillips curve:

Accepted Answer

A) consumption depends on prices. 
B) the inflation rate varies inversely with the unemployment rate. 
C) the inflation rate varies directly with the unemployment rate. 
D) prices and tax rates are directly related. 
A) consumption depends on prices. 
B) the inflation rate varies inversely with the unemployment rate. 
C) the inflation rate varies directly with the unemployment rate. 
D) prices and tax rates are directly related.

Question 19

The negative relationship between the inflation rate and the unemployment rate is known as the:

Accepted Answer

A) short-run Phillips curve. 
B) short-run aggregate supply curve. 
C) long-run Phillips curve. 
D) aggregate demand curve. 
A) short-run Phillips curve. 
B) short-run aggregate supply curve. 
C) long-run Phillips curve. 
D) aggregate demand curve.

Question 20

Use the following to answer questions :
Figure: Short-Run Phillips Curve  
-(Figure: Short-Run Phillips Curve) Look at the figure Short-Run Phillips Curve. The natural rate of unemployment is:

Accepted Answer

A) 3%. 
B) 5%. 
C) 7%. 
D) 8%. 
A) 3%. 
B) 5%. 
C) 7%. 
D) 8%.

From 2000 to 2008 Zimbabwe's prices:

The debt is monetized when:

The inflation tax is the effect on the public of:

The long-run Phillips curve is:

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 output gap was:

Suppose a fall in commodity prices causes a supply shock. The short-run Phillips curve will:

When the output gap is positive, the unemployment rate is:

The short-run Phillips curve shows:

An increase in expected inflation will affect the short-run Phillips curve:

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 1982, the natural unemployment rate (structural plus frictional) was approximately:

If an administration pursues expansionary policy before an election to bring down unemployment, it can:

The inflation tax is equal to:

Deflation leads to winners and losers; for example:

A Phillips curve implies a negative relationship between:

A negative output gap implies an unemployment rate:

The natural rate of unemployment is 4%, and the economy is producing 95% of its potential output. Okun's law predicts an unemployment rate of:

A negative output gap is associated with a(n) _____ unemployment rate.

Along a Phillips curve:

The negative relationship between the inflation rate and the unemployment rate is known as 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. The natural rate of unemployment is:

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

From 2000 to 2008 Zimbabwe's prices:

The debt is monetized when:

The inflation tax is the effect on the public of:

The long-run Phillips curve is:

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 output gap was:

Suppose a fall in commodity prices causes a supply shock. The short-run Phillips curve will:

When the output gap is positive, the unemployment rate is:

The short-run Phillips curve shows:

An increase in expected inflation will affect the short-run Phillips curve:

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 1982, the natural unemployment rate (structural plus frictional) was approximately:

If an administration pursues expansionary policy before an election to bring down unemployment, it can:

The inflation tax is equal to:

Deflation leads to winners and losers; for example:

A Phillips curve implies a negative relationship between:

A negative output gap implies an unemployment rate:

The natural rate of unemployment is 4%, and the economy is producing 95% of its potential output. Okun's law predicts an unemployment rate of:

A negative output gap is associated with a(n) _____ unemployment rate.

Along a Phillips curve:

The negative relationship between the inflation rate and the unemployment rate is known as 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. The natural rate of unemployment is:

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