Question 1

In the short run,policy that changes aggregate demand changes

Accepted Answer

A) both unemployment and the price level. 
B) neither unemployment nor the price level. 
C) only unemployment. 
D) only the price level. 
A) both unemployment and the price level. 
B) neither unemployment nor the price level. 
C) only unemployment. 
D) only the price level.

Question 2

According to the Phillips curve,policymakers could reduce both inflation and unemployment by

Accepted Answer

A) increasing the money supply. 
B) increasing government expenditures. 
C) raising taxes. 
D) None of the above is correct. 
A) increasing the money supply. 
B) increasing government expenditures. 
C) raising taxes. 
D) None of the above is correct.

Question 3

If policymakers decrease aggregate demand,then in the long run

Accepted Answer

A) prices will be lower and unemployment will be higher. 
B) prices will be lower and unemployment will be unchanged. 
C) prices and unemployment will be unchanged. 
D) None of the above is correct. 
A) prices will be lower and unemployment will be higher. 
B) prices will be lower and unemployment will be unchanged. 
C) prices and unemployment will be unchanged. 
D) None of the above is correct.

Question 4

The short-run relationship between inflation and unemployment is often called

Accepted Answer

A) the Classical Dichotomy. 
B) Money Neutrality. 
C) the Phillips curve. 
D) None of the above is correct. 
A) the Classical Dichotomy. 
B) Money Neutrality. 
C) the Phillips curve. 
D) None of the above is correct.

Question 5

Figure 35-2
Use the pair of diagrams below to answer the following questions.  
-Refer to Figure 35-2.If the economy starts at C and 1,then in the short run,an increase in the money supply growth rate moves the economy to

Accepted Answer

A) A and 1 
B) B and 2 
C) C and 3 
D) None of the above is correct. 
A) A and 1 
B) B and 2 
C) C and 3 
D) None of the above is correct.

Question 6

Other things constant,which of the following would reduce unemployment and raise inflation?

Accepted Answer

A) businesses become more optimistic about the future of the economy 
B) because of high growth abroad,net exports rise 
C) the government cuts taxes 
D) All of the above are correct. 
A) businesses become more optimistic about the future of the economy 
B) because of high growth abroad,net exports rise 
C) the government cuts taxes 
D) All of the above are correct.

Question 7

A.W.Phillips's discovery of a particular relationship between unemployment and inflation for the United Kingdom

Accepted Answer

A) could not be extended to other countries,despite many researchers' attempts to provide that extension. 
B) was quickly extended to other countries by researchers. 
C) was extended to only one other country - the United States. 
D) was harshly criticized by the American economists Paul Samuelson and Robert Solow on the grounds that Phillips's study was fundamentally flawed. 
A) could not be extended to other countries,despite many researchers' attempts to provide that extension. 
B) was quickly extended to other countries by researchers. 
C) was extended to only one other country - the United States. 
D) was harshly criticized by the American economists Paul Samuelson and Robert Solow on the grounds that Phillips's study was fundamentally flawed.

Question 8

Suppose that the money supply decreases.In the short run,this increases prices according to

Accepted Answer

A) both the short-run Phillips curve and the aggregate demand and aggregate supply model. 
B) neither the short-run Phillips curve nor the aggregate demand and aggregate supply model. 
C) the short-run Phillips curve,but not according to the aggregate demand and aggregate supply model. 
D) the aggregate demand and aggregate supply model but not according to the short-run Phillips curve. 
A) both the short-run Phillips curve and the aggregate demand and aggregate supply model. 
B) neither the short-run Phillips curve nor the aggregate demand and aggregate supply model. 
C) the short-run Phillips curve,but not according to the aggregate demand and aggregate supply model. 
D) the aggregate demand and aggregate supply model but not according to the short-run Phillips curve.

Question 9

Figure 35-3.The left-hand graph shows a short-run aggregate-supply (SRAS)curve and two aggregate-demand (AD)curves.On the left-hand diagram,Y represents output and on the right-hand diagram,U represents the unemployment rate.    
-Refer to Figure 35-3.Assume the figure charts possible outcomes for the year 2018.In 2018,the economy is at point B on the left-hand graph,which corresponds to point B on the right-hand graph.Also,point A on the left-hand graph corresponds to A on the right-hand graph.The price level in the year 2018 is

Accepted Answer

A) 155.56. 
B) 159.00. 
C) 163.50. 
D) 170.04. 
A) 155.56. 
B) 159.00. 
C) 163.50. 
D) 170.04.

Question 10

Samuelson and Solow reasoned that when aggregate demand was low,unemployment was

Accepted Answer

A) high,so there was upward pressure on wages and prices. 
B) high,so there was downward pressure on wages and prices. 
C) low,so there was upward pressure on wages and prices. 
D) low,so there was downward pressure on wages and prices. 
A) high,so there was upward pressure on wages and prices. 
B) high,so there was downward pressure on wages and prices. 
C) low,so there was upward pressure on wages and prices. 
D) low,so there was downward pressure on wages and prices.

Question 11

Figure 35-3.The left-hand graph shows a short-run aggregate-supply (SRAS)curve and two aggregate-demand (AD)curves.On the left-hand diagram,Y represents output and on the right-hand diagram,U represents the unemployment rate.    
-Refer to Figure 35-3.Assume the figure depicts possible outcomes for the year 2018.In 2018,the economy is at point A on the left-hand graph,which corresponds to point A on the right-hand graph.The price level in the year 2017 was

Accepted Answer

A) 144. 
B) 150. 
C) 152. 
D) 156. 
A) 144. 
B) 150. 
C) 152. 
D) 156.

Question 12

The economy will move to a point on the short-run Phillips curve where unemployment is higher if

Accepted Answer

A) the inflation rate decreases. 
B) the government increases its expenditures. 
C) the Fed increases the money supply. 
D) None of the above is correct. 
A) the inflation rate decreases. 
B) the government increases its expenditures. 
C) the Fed increases the money supply. 
D) None of the above is correct.

Question 13

Figure 35-1.The left-hand graph shows a short-run aggregate-supply (SRAS)curve and two aggregate-demand (AD)curves.On the right-hand diagram,U represents the unemployment rate.  
-Refer to Figure 35-1.What is measured along the vertical axis of the right-hand graph?

Accepted Answer

A) the interest rate 
B) the inflation rate 
C) the wage rate 
D) the growth rate of the nominal money supply 
A) the interest rate 
B) the inflation rate 
C) the wage rate 
D) the growth rate of the nominal money supply

Question 14

Figure 35-3.The left-hand graph shows a short-run aggregate-supply (SRAS)curve and two aggregate-demand (AD)curves.On the left-hand diagram,Y represents output and on the right-hand diagram,U represents the unemployment rate.    
-Refer to Figure 35-3.What is measured along the vertical axis of the left-hand graph?

Accepted Answer

A) the wage rate 
B) the inflation rate 
C) the price level 
D) the change in output from one year to the next 
A) the wage rate 
B) the inflation rate 
C) the price level 
D) the change in output from one year to the next

Question 15

Suppose Americans become concerned about saving for retirement and,as a result,reduce their current consumption expenditures.Which of the following would you expect to occur as a result of this change?

Accepted Answer

A) In the short run,unemployment will increase and inflation will fall. 
B) ​In the short run,unemployment will increase and inflation will rise. 
C) ​In the short run,unemployment will decrease and inflation will rise. 
D) ​In the short run,unemployment will decrease and inflation will fall. 
A) In the short run,unemployment will increase and inflation will fall. 
B) ​In the short run,unemployment will increase and inflation will rise. 
C) ​In the short run,unemployment will decrease and inflation will rise. 
D) ​In the short run,unemployment will decrease and inflation will fall.

Question 16

Figure 35-1.The left-hand graph shows a short-run aggregate-supply (SRAS)curve and two aggregate-demand (AD)curves.On the right-hand diagram,U represents the unemployment rate.  
-Refer to Figure 35-1.What is measured along the horizontal axis of the left-hand graph?

Accepted Answer

A) the wage rate 
B) the inflation rate 
C) employment 
D) output 
A) the wage rate 
B) the inflation rate 
C) employment 
D) output

Question 17

Figure 35-2
Use the pair of diagrams below to answer the following questions.  
-Refer to Figure 35-2.If the economy starts at C and 1,then in the short run,a decrease in the money supply moves the economy to

Accepted Answer

A) E and 1. 
B) D and 2. 
C) D and 3. 
D) None of the above is correct. 
A) E and 1. 
B) D and 2. 
C) D and 3. 
D) None of the above is correct.

Question 18

Figure 35-1.The left-hand graph shows a short-run aggregate-supply (SRAS)curve and two aggregate-demand (AD)curves.On the right-hand diagram,U represents the unemployment rate.  
-Refer to Figure 35-1.Suppose points F and G on the right-hand graph represent two possible outcomes for an imaginary economy in the year 2012,and those two points correspond to points B and C,respectively,on the left-hand graph.Also suppose we know that the price index equaled 120 in 2011.Then the numbers 115 and 130 on the vertical axis of the left-hand graph would have to be replaced by

Accepted Answer

A) 155 and 175,respectively. 
B) 138 and 156,respectively. 
C) 137.5 and 154.75,respectively. 
D) 135 and 150,respectively. 
A) 155 and 175,respectively. 
B) 138 and 156,respectively. 
C) 137.5 and 154.75,respectively. 
D) 135 and 150,respectively.

Question 19

In the long run,policy that changes aggregate demand changes

Accepted Answer

A) both unemployment and the price level. 
B) neither unemployment nor the price level. 
C) only unemployment. 
D) only the price level. 
A) both unemployment and the price level. 
B) neither unemployment nor the price level. 
C) only unemployment. 
D) only the price level.

Question 20

Figure 35-4.The left-hand graph shows a short-run aggregate-supply (SRAS)curve and two aggregate-demand (AD)curves.On the left-hand diagram,the price level is measured on the vertical axis;on the right-hand diagram,the inflation rate is measured on the vertical axis.    
-Refer to Figure 35-4.What is measured along the horizontal axis of the left-hand graph?

Accepted Answer

A) the wage rate 
B) the inflation rate 
C) output 
D) the interest rate 
A) the wage rate 
B) the inflation rate 
C) output 
D) the interest rate

Exam 22: The Short Run Trade Off Between Inflation and Unemployment: The Phillips Curve

In the short run,policy that changes aggregate demand changes

According to the Phillips curve,policymakers could reduce both inflation and unemployment by

If policymakers decrease aggregate demand,then in the long run

The short-run relationship between inflation and unemployment is often called

Figure 35-2 Use the pair of diagrams below to answer the following questions. -Refer to Figure 35-2.If the economy starts at C and 1,then in the short run,an increase in the money supply growth rate moves the economy to

Other things constant,which of the following would reduce unemployment and raise inflation?

A.W.Phillips's discovery of a particular relationship between unemployment and inflation for the United Kingdom

Suppose that the money supply decreases.In the short run,this increases prices according to

Samuelson and Solow reasoned that when aggregate demand was low,unemployment was

The economy will move to a point on the short-run Phillips curve where unemployment is higher if

Figure 35-1.The left-hand graph shows a short-run aggregate-supply (SRAS)curve and two aggregate-demand (AD)curves.On the right-hand diagram,U represents the unemployment rate. -Refer to Figure 35-1.What is measured along the vertical axis of the right-hand graph?

Suppose Americans become concerned about saving for retirement and,as a result,reduce their current consumption expenditures.Which of the following would you expect to occur as a result of this change?

Figure 35-1.The left-hand graph shows a short-run aggregate-supply (SRAS)curve and two aggregate-demand (AD)curves.On the right-hand diagram,U represents the unemployment rate. -Refer to Figure 35-1.What is measured along the horizontal axis of the left-hand graph?

Figure 35-2 Use the pair of diagrams below to answer the following questions. -Refer to Figure 35-2.If the economy starts at C and 1,then in the short run,a decrease in the money supply moves the economy to

In the long run,policy that changes aggregate demand changes

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion

Application International Trade: Part A

Application International Trade: Part B

Measuring a Nations Income

Measuring a Nations Income: The Economy's Income and Expenditure

Measuring a Nations Income: The Measurement of GDP