Exam 17: Inflation,unemployment,and Federal Reserve Policy

If the Federal Reserve chooses to fight high unemployment with expansionary monetary policy and firms and consumers expect this policy to increase inflation,which of the following would you expect to see?

Evidence shows that many people who delay searching for a job for a year or longer after they are laid off

When inflation is very low,how do workers and firms adjust their expectations of inflation?

Expansionary monetary policy will result in

The short-run Phillips curve is ________ than the long-run Phillips curve.

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

If people assume that future rates of inflation will ________,they are said to have adaptive expectations.

If the Fed decided to reverse its policy actions implemented during the heart of the recession,the Fed would be acting to try to prevent

If workers and firms lower their inflation expectations,

Figure 17-7 -Refer to Figure 17-7.Consider the Phillips curves depicted in the graph above.The Fed announces its intention to decrease inflation from 10 percent to 5 percent per year,and it succeeds.If the assumptions of the rational expectations school hold true,and the Fed's announcement is credible,the rate of unemployment will be ________ in the short run.

Real business cycle models argue that fluctuations in real GDP are caused by unanticipated changes in the money supply.

Figure 17-8 -Refer to Figure 17-8.A typical long-run Phillips curve would have the appearance of a curve running through points

An increase in expected inflation will shift the short-run Phillips Curve.

Assume weak growth in aggregate demand keeps the economy below potential GDP,so unemployment rises but inflation falls.This explains the ________ slope of the short-run Phillips curve.

If the long-run aggregate supply curve is vertical,

If workers accurately predict the rate of inflation,is there a short-run trade-off between inflation and unemployment,as predicted by the Phillips curve? Why or why not?

Two actions by the Fed during Alan Greenspan's term as chairman have been identified as possibly contributing to the financial crisis in 2008.Which of the following was one of those actions?

The experience of Paul Volcker's fight against inflation during the late 1970s and early 1980s indicates that firms and workers may have

What is the natural rate of unemployment?

A decrease in the level of cyclical unemployment will shift the long-run Phillips curve.