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

A central bank sets out to reduce unemployment by changing the money supply growth rate. The long-run Phillips curve shows that in comparison to their original rates, this policy will eventually lead to

A central bank raises the money supply growth rate and keeps it higher. As the economy moves from the short-run equilibrium created by the increase in the money supply growth back to long-run equilibrium what happens to the unemployment rate?

If a central bank reduced inflation by 2 percentage points and that made output fall by 3 percentage points for 2 years and the unemployment rate rise from 3 percent to 5 percent for 2 years, the sacrifice ratio is

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

Figure 35-8 Use this graph to answer the questions below. -Refer to figure 35-8. If the economy starts at 5% unemployment and 5% inflation then if the Federal Reserve pursues a contractionary monetary policy, in the short run the economy moves to

How is a decrease in the natural rate of unemployment shown in the Phillips curve diagram? Does this decrease change the inflation rate?

Suppose that the central bank unexpectedly increases the growth rate of the money supply. In the short run the effects of this are shown by

If inflation is greater than expected, then the unemployment rate is

Unexpectedly high inflation reduces unemployment in the short run, but as inflation expectations adjust the unemployment rate returns to its natural rate.

How does a central bank's accommodation of an adverse supply shock change the long­run results of the shock?

Which of the following is correct if there is a favorable supply shock?

If the natural rate of unemployment falls,

Samuelson and Solow argued that

Which of the following would shift the long-run Phillips curve to the right?

Disinflation is like

The misery index is supposed to measure the

Write the equation representing the short-run Phillips curve.

By about 1973, U.S. policymakers had learned that

When they are confronted with an adverse shock to aggregate supply, policymakers face a difficult choice in that

The sacrifice ratio is the