Exam 17: Inflation,unemployment,and Federal Reserve Policy

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 expectations of inflation are reduced to 8 percent by the Fed's announcement,the rate of unemployment will be ________ in the short run.

If the economy is producing ________,unemployment is at its natural rate.

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

________ would be the source of a "real" business cycle.

Figure 17-9 -Refer to Figure 17-9.A(n)________ would be depicted as a movement from A to D to C.

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?

If the Fed chose to change its policy actions implemented during the heart of the recession faster than the timing suggested by the White House,this would be an indication of the Fed's

Figure 17-9 -Refer to Figure 17-9.A supply shock,such as rising oil prices,would be depicted as a movement from

Ceteris paribus,in the short run following a decrease in the rate of growth in aggregate demand,we would expect to see an increase in the rate of unemployment and a decrease in the rate of inflation.

When unemployment is below its natural rate,the inflation rate will eventually

According to ________,the economy is normally at potential GDP.

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

In the long run,the Phillips curve is a ________ at ________.

If workers and firms raise their inflation expectations,

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

In the long run,the Federal Reserve can control which of the following?

Figure 17-6 -Refer to Figure 17-6.If firms and workers have rational expectations,an expansionary monetary policy will cause the short-run equilibrium to move from

Deflation refers to

Which of the following could increase unemployment and inflation simultaneously?

If the rate of inflation in the economy is steady at 5 percent per year,how does the short-run Phillips curve predict that the unemployment rate will be changing,if at all? Does your answer change if inflation in the economy is 0 percent? Illustrate your answer with a Phillips curve.