Exam 17: Inflation,unemployment,and Federal Reserve Policy

A study conducted by Robert Shiller,a Yale Economist,found that a large majority of the public thinks that increases in inflation will not quickly lead to an increase in wages.

If the current unemployment rate is 5%,under which of the following circumstances would you expect the Fed to use contractionary monetary policy?

The curve showing the short-run relationship between the ________ and the ________ is called the Phillips curve.

Figure 17-1 -Refer to Figure 17-1.Suppose that the economy is currently at point A on the short-run Phillips curve in the figure above,and the unemployment rate at A is the natural rate.If the economy was to move to point C,which of the following must be true?

What is the relationship between the short-run Phillips curve and the long-run Phillips curve?

According to the short-run Phillips curve,which of the following would result in high rates of unemployment?

According to the "rational expectations" school of thought in macroeconomics,the short-run Phillips curve is ________ in face of anticipated changes in monetary policy.

When will a decrease in aggregate demand not result in a lower inflation rate in the short run?

Figure 17-2 -Refer to Figure 17-2.Suppose the economy is at point A in the figure above.Which of the following is true?

The actual real wage is lower than the expected real wage if

Figure 17-2 -Refer to Figure 17-2.Suppose the economy is at point B in the figure above.Which of the following is true?

If the Federal Reserve announces that its target for the federal funds rate is falling from 3 percent to 2.25 percent,how do you expect workers and firms to react?

In an effort to discover whether or not workers understand inflation,economist Robert Shiller conducted a survey.When asked about the effect of general inflation on their wages or salary,the most popular response coming from workers was,

Suppose that last year the unemployment rate was 5 percent and the inflation rate was 2.5 percent.If the natural rate of unemployment is 5 percent,how do you expect inflation to change?

According to the "rational expectations" school of thought in macroeconomics,the short-run Phillips curve is ________ in face of unanticipated changes in monetary policy.

Contractionary monetary policy will result in

If firms and workers have adaptive expectations,what impact will contractionary monetary policy have on inflation,unemployment,and the Phillips curve?

An increase in the level of structural unemployment will shift the long-run Phillips curve.

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

Figure 17-2 -Refer to Figure 17-2.At which point are inflation expectations equal to the actual inflation rate?