Exam 28: Inflation, unemployment, and Federal Reserve Policy

What can the Federal Reserve do to increase the natural rate of unemployment?

Figure 28-9 -Refer to Figure 28-9.A follower of the new classical macroeconomics would argue that a contractionary monetary policy to lower inflation after a supply shock,like that pursued by Volcker in 1979,would result in a movement from

If the economy is producing at potential GDP

The expansionary monetary and fiscal policies of the 1960s resulted in

Figure 28-1 -Refer to Figure 28-1.Suppose that the economy is currently at point A,and the unemployment rate at A is the natural rate.What policy would the Federal Reserve pursue if it wanted the economy to move to point C in the long run?

Figure 28-5 -Refer to Figure 28-5.Consider the Phillips curves shown in the above graph.We can conclude from this graph that

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

If firms and workers have rational expectations,including knowledge of the policy being used by the Federal Reserve

Figure 28-9 -Refer to Figure 28-9.A(n)________ would be depicted as a movement from A to D to C.

Deflation refers to

A falling price level is called ________ and a fall in the rate of inflation is called ________.

If inflationary expectations on the part of the public increase,the trade-off between inflation and unemployment becomes worse.

Monetary policy can

Last year,the unemployment rate was 4 percent and the inflation rate was 3 percent.If the natural rate of unemployment is 3 percent,how do you expect inflation to change?

During a time when the inflation rate is increasing each year for a number of years,are adaptive expectations or rational expectations likely to give the more accurate forecasts? Briefly explain.

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

Figure 28-8 -Refer to Figure 28-8.A typical long-run Phillips curve would have the appearance of a curve running through points

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

Which of the following could decrease unemployment and inflation simultaneously?

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