Question 1

Which of the following results in higher inflation and higher unemployment in the short run?

Accepted Answer

A)  a more expansionary monetary policy 
B)  a more contractionary monetary policy 
C)  a decrease in the minimum wage 
D)  an adverse supply shock such as an increase in the price of oil 
A)  a more expansionary monetary policy 
B)  a more contractionary monetary policy 
C)  a decrease in the minimum wage 
D)  an adverse supply shock such as an increase in the price of oil

Question 2

Which of the following is upward-sloping?

Accepted Answer

A)  both the long-run and the short-run Phillips curve 
B)  neither the long-run nor the short-run Phillips curve 
C)  the long-run Phillips curve, but not the short-run Phillips curve 
D)  the short-run Phillips curve, but not the long-run Phillips curve 
A)  both the long-run and the short-run Phillips curve 
B)  neither the long-run nor the short-run Phillips curve 
C)  the long-run Phillips curve, but not the short-run Phillips curve 
D)  the short-run Phillips curve, but not the long-run Phillips curve

Question 3

According to the short-run Phillips curve, if the central bank increases the money supply, then

Accepted Answer

A)  inflation and unemployment will both fall. 
B)  inflation and unemployment will both rise. 
C)  inflation will fall and unemployment will rise. 
D)  inflation will rise and unemployment will fall. 
A)  inflation and unemployment will both fall. 
B)  inflation and unemployment will both rise. 
C)  inflation will fall and unemployment will rise. 
D)  inflation will rise and unemployment will fall.

Question 4

In the long run,

Accepted Answer

A)  the natural rate of unemployment depends primarily on the level of aggregate demand. 
B)  inflation depends primarily upon the money supply growth rate. 
C)  there is a tradeoff between the inflation rate and the natural rate of unemployment. 
D)  All of the above are correct. 
A)  the natural rate of unemployment depends primarily on the level of aggregate demand. 
B)  inflation depends primarily upon the money supply growth rate. 
C)  there is a tradeoff between the inflation rate and the natural rate of unemployment. 
D)  All of the above are correct.

Question 5

If there is a temporary adverse supply shock, then the short-run Phillips curve shifts to the

Accepted Answer

A)  right. It remains to the right regardless of monetary policy. 
B)  right. It remains to the right if the central bank pursues expansionary monetary policy. 
C)  left. It remains to the left regardless of monetary policy. 
D)  left. It remains to the left if the central bank pursues expansionary monetary policy. 
A)  right. It remains to the right regardless of monetary policy. 
B)  right. It remains to the right if the central bank pursues expansionary monetary policy. 
C)  left. It remains to the left regardless of monetary policy. 
D)  left. It remains to the left if the central bank pursues expansionary monetary policy.

Question 6

A movement to the left along a given short-run Phillips curve could be caused by

Accepted Answer

A)  a reduction in the natural rate of unemployment or expansionary monetary policy. 
B)  expansionary monetary policy, but not a reduction in the natural rate of unemployment. 
C)  either a reduction in the natural rate of unemployment or a contractionary monetary policy. 
D)  contractionary monetary policy, but not a reduction in the natural rate of unemployment. 
A)  a reduction in the natural rate of unemployment or expansionary monetary policy. 
B)  expansionary monetary policy, but not a reduction in the natural rate of unemployment. 
C)  either a reduction in the natural rate of unemployment or a contractionary monetary policy. 
D)  contractionary monetary policy, but not a reduction in the natural rate of unemployment.

Question 7

From 2008-2009 the Federal Reserve created a very large increase in the money supply. According to the short-run Phillips curve this policy should have

Accepted Answer

A)  raised inflation and unemployment. 
B)  raised inflation and reduced unemployment. 
C)  reduced inflation and raised unemployment. 
D)  reduced inflation and unemployment. 
A)  raised inflation and unemployment. 
B)  raised inflation and reduced unemployment. 
C)  reduced inflation and raised unemployment. 
D)  reduced inflation and unemployment.

Question 8

The sacrifice ratio is the percentage point increase in the unemployment rate created in the process of reducing inflation by one percentage point.

Accepted Answer

A) True 
 B)False

Question 9

A country is likely to have a higher sacrifice ratio if

Accepted Answer

A)  contracts are shorter, and people believe the central bank will reduce inflation. 
B)  contracts are longer, and people believe the central bank will not reduce inflation 
C)  contracts are longer, and people believe the central bank will reduce inflation. 
D)  contracts are shorter, and people believe the central bank will not reduce inflation. 
A)  contracts are shorter, and people believe the central bank will reduce inflation. 
B)  contracts are longer, and people believe the central bank will not reduce inflation 
C)  contracts are longer, and people believe the central bank will reduce inflation. 
D)  contracts are shorter, and people believe the central bank will not reduce inflation.

Question 10

Which of the following would tend to shorten recessions associated with anti-inflation policies by central banks?

Accepted Answer

A)  People adjust their expectations of inflation rapidly. 
B)  People believe policy announcements made by central bank officials. 
C)  The short-run Phillips shifts rapidly. 
D)  All of the above are correct. 
A)  People adjust their expectations of inflation rapidly. 
B)  People believe policy announcements made by central bank officials. 
C)  The short-run Phillips shifts rapidly. 
D)  All of the above are correct.

Question 11

Figure 35-6
Use the graph below to answer the following questions.  
-Refer to Figure 35-6. Curve 1 is the

Accepted Answer

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

Question 12

If the natural rate of unemployment falls,

Accepted Answer

A)  both the short-run Phillips curve and the long-run Phillips curve shift. 
B)  only the short-run Phillips curve shifts. 
C)  only the long-run Phillips curve shifts. 
D)  neither the short-run nor the long-run Phillips curves shift. 
A)  both the short-run Phillips curve and the long-run Phillips curve shift. 
B)  only the short-run Phillips curve shifts. 
C)  only the long-run Phillips curve shifts. 
D)  neither the short-run nor the long-run Phillips curves shift.

Question 13

If the central bank decreases the money supply, then output

Accepted Answer

A)  and unemployment rises. 
B)  rises and unemployment falls. 
C)  falls and unemployment rises. 
D)  and unemployment falls. 
A)  and unemployment rises. 
B)  rises and unemployment falls. 
C)  falls and unemployment rises. 
D)  and unemployment falls.

Question 14

Refer to Monetary Policy in Mokania. The Bank of Mokania publicizes its intent to reduce the inflation rate to 5%. If it is successful in doing so but people had expected inflation to fall only to 10%, then

Accepted Answer

A)  unemployment rises but it would have risen by more if people had expected inflation to be 6%. 
B)  unemployment rises but it would have risen by less if people had expected inflation to be 6%. 
C)  unemployment falls but it would have fallen by more if people had expected inflation to be 6%. 
D)  unemployment falls but it would have fallen by less if people had expected inflation to be 6%. 
A)  unemployment rises but it would have risen by more if people had expected inflation to be 6%. 
B)  unemployment rises but it would have risen by less if people had expected inflation to be 6%. 
C)  unemployment falls but it would have fallen by more if people had expected inflation to be 6%. 
D)  unemployment falls but it would have fallen by less if people had expected inflation to be 6%.

Question 15

Suppose the Federal Reserve pursues contractionary monetary policy. In the long run

Accepted Answer

A)  both inflation and the unemployment rate are higher than they were prior to the change in policy. 
B)  inflation is higher and the unemployment rate is the same as it was prior to the change in policy. 
C)  inflation is lower and the unemployment rate is lower than it was prior to the change in policy. 
D)  inflation is lower and unemployment is the same as it was prior to the change in policy. 
A)  both inflation and the unemployment rate are higher than they were prior to the change in policy. 
B)  inflation is higher and the unemployment rate is the same as it was prior to the change in policy. 
C)  inflation is lower and the unemployment rate is lower than it was prior to the change in policy. 
D)  inflation is lower and unemployment is the same as it was prior to the change in policy.

Question 16

Which of the following leads to a lower level of unemployment in the long run?

Accepted Answer

A)  both an increase in the size of the money supply and an increase in the money supply growth rate 
B)  an increase in the size of the money supply but not an increase in the money supply growth rate 
C)  an increase in the money supply growth rate, but not an increase in the size of the money supply 
D)  neither an increase in the size of the money supply nor an increase in the money supply growth rate 
A)  both an increase in the size of the money supply and an increase in the money supply growth rate 
B)  an increase in the size of the money supply but not an increase in the money supply growth rate 
C)  an increase in the money supply growth rate, but not an increase in the size of the money supply 
D)  neither an increase in the size of the money supply nor an increase in the money supply growth rate

Question 17

The sacrifice ratio of the Volcker disinflation was larger than previous estimates had predicted.

Accepted Answer

A) True 
 B)False

Question 18

A favorable supply shock will cause

Accepted Answer

A)  unemployment to rise and the short-run Phillips curve to shift right. 
B)  unemployment to rise and the short-run Phillips curve to shift left. 
C)  unemployment to fall and the short-run Phillips curve to shift right. 
D)  unemployment to fall and the short-run Phillips curve to shift left. 
A)  unemployment to rise and the short-run Phillips curve to shift right. 
B)  unemployment to rise and the short-run Phillips curve to shift left. 
C)  unemployment to fall and the short-run Phillips curve to shift right. 
D)  unemployment to fall and the short-run Phillips curve to shift left.

Question 19

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 20

For a given short-run Phillips curve, if expected inflation is 8% but actual inflation is 10%, is the unemployment rate above or below its natural rate?

Accepted Answer

Unemployme

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

Which of the following results in higher inflation and higher unemployment in the short run?

Which of the following is upward-sloping?

According to the short-run Phillips curve, if the central bank increases the money supply, then

In the long run,

If there is a temporary adverse supply shock, then the short-run Phillips curve shifts to the

A movement to the left along a given short-run Phillips curve could be caused by

From 2008-2009 the Federal Reserve created a very large increase in the money supply. According to the short-run Phillips curve this policy should have

The sacrifice ratio is the percentage point increase in the unemployment rate created in the process of reducing inflation by one percentage point.

A country is likely to have a higher sacrifice ratio if

Which of the following would tend to shorten recessions associated with anti-inflation policies by central banks?

Figure 35-6 Use the graph below to answer the following questions. -Refer to Figure 35-6. Curve 1 is the

If the natural rate of unemployment falls,

If the central bank decreases the money supply, then output

Refer to Monetary Policy in Mokania. The Bank of Mokania publicizes its intent to reduce the inflation rate to 5%. If it is successful in doing so but people had expected inflation to fall only to 10%, then

Suppose the Federal Reserve pursues contractionary monetary policy. In the long run

Which of the following leads to a lower level of unemployment in the long run?

The sacrifice ratio of the Volcker disinflation was larger than previous estimates had predicted.

A favorable supply shock will cause

For a given short-run Phillips curve, if expected inflation is 8% but actual inflation is 10%, is the unemployment rate above or below its natural rate?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

Six Debates Over Macroeconomic Policy

Filters