Question 1

If the Phillips curve represents a "structural relationship," then

Accepted Answer

A) the trade-off between unemployment and inflation is permanent. 
B) the trade-off between unemployment and inflation holds only for the short run. 
C) the trade-off between unemployment and inflation holds in the long run,but not in the short run. 
D) the Phillips curve will be vertical in the long run. 
A) the trade-off between unemployment and inflation is permanent. 
B) the trade-off between unemployment and inflation holds only for the short run. 
C) the trade-off between unemployment and inflation holds in the long run,but not in the short run. 
D) the Phillips curve will be vertical in the long run.

Question 2

Figure 17-5  
-Refer to Figure 17-5.Consider the Phillips curves shown in the above graph.We can conclude from this graph that

Accepted Answer

A) the natural rate of unemployment in this economy is 5.5 percent. 
B) the expected rate of inflation in this economy is 10 percent. 
C) ceteris paribus,a fall in the rate of inflation to 5 percent will increase unemployment to 7.5 percent in the short run. 
D) All of the above are correct. 
A) the natural rate of unemployment in this economy is 5.5 percent. 
B) the expected rate of inflation in this economy is 10 percent. 
C) ceteris paribus,a fall in the rate of inflation to 5 percent will increase unemployment to 7.5 percent in the short run. 
D) All of the above are correct.

Question 3

Use the following information to draw a graph showing the short-run and long-run Phillips curves,and be sure your graph shows the point where the short-run and long-run Phillips curves intersect.
Natural rate of unemployment = 4 percent
Current rate of unemployment = 5 percent
Expected inflation rate = 3 percent
Current inflation rate = 2 percent

Accepted Answer

The answer of Use the following information to draw a...

Question 4

An increase in the expected inflation rate will

Accepted Answer

A) shift the short-run Phillips curve to the right. 
B) shift the short-run Phillips curve to the left. 
C) reduce the inflation rate. 
D) reduce the unemployment rate. 
A) shift the short-run Phillips curve to the right. 
B) shift the short-run Phillips curve to the left. 
C) reduce the inflation rate. 
D) reduce the unemployment rate.

Question 5

Under Alan Greenspan,the Fed strived to hit its goals of price stability and high employment through

Accepted Answer

A) setting targets for the federal funds rate of interest. 
B) setting targets for rates of growth in the M1 and M2 money supplies. 
C) practicing discretionary monetary policy,reacting to counter-changes in the level of unemployment during recessions and booms. 
D) strict adherence to rules based strategies. 
A) setting targets for the federal funds rate of interest. 
B) setting targets for rates of growth in the M1 and M2 money supplies. 
C) practicing discretionary monetary policy,reacting to counter-changes in the level of unemployment during recessions and booms. 
D) strict adherence to rules based strategies.

Question 6

An increase in expected inflation will

Accepted Answer

A) increase real wages. 
B) decrease the natural rate of unemployment. 
C) shift the long-run Phillips curve to the right. 
D) None of the above is correct. 
A) increase real wages. 
B) decrease the natural rate of unemployment. 
C) shift the long-run Phillips curve to the right. 
D) None of the above is correct.

Question 7

One problem with deflation is that it can raise the real value of debt.

Accepted Answer

A) True 
 B)False

Question 8

If unemployment persists for a long period of time,the natural rate of unemployment rises.

Accepted Answer

A) True 
 B)False

Question 9

All other factors held constant,increased growth in aggregate demand will

Accepted Answer

A) increase inflation. 
B) reduce unemployment. 
C) move the economy to a higher point on the short-run Phillips curve. 
D) All of the above are correct. 
A) increase inflation. 
B) reduce unemployment. 
C) move the economy to a higher point on the short-run Phillips curve. 
D) All of the above are correct.

Question 10

During the 1960s,when confronted with moderate and stable inflation,people tended to form adaptive expectations of future inflation rates.

Accepted Answer

A) True 
 B)False

Question 11

With which of the following statements would a "real business cycle" theorist most closely agree?

Accepted Answer

A) "Monetary policies have the greatest impact on real GDP when they are anticipated." 
B) "Expansionary monetary policy allows the central bank to control inflation and unemployment simultaneously." 
C) "Wages adjust rapidly to changes in inflation as long as expectations are formed rationally." 
D) "Technological shocks to the economy affect only aggregate demand in the short run." 
A) "Monetary policies have the greatest impact on real GDP when they are anticipated." 
B) "Expansionary monetary policy allows the central bank to control inflation and unemployment simultaneously." 
C) "Wages adjust rapidly to changes in inflation as long as expectations are formed rationally." 
D) "Technological shocks to the economy affect only aggregate demand in the short run."

Question 12

If expected inflation rises,the long-run Phillips curve will

Accepted Answer

A) shift to the right. 
B) not be affected. 
C) shift to the left. 
D) become negatively sloped. 
A) shift to the right. 
B) not be affected. 
C) shift to the left. 
D) become negatively sloped.

Question 13

If the economy experiences a negative supply shock,which of the following will be true?

Accepted Answer

A) Inflation will rise,and real GDP will fall. 
B) Inflation will rise,and real GDP will rise. 
C) Inflation will fall,and real GDP will fall. 
D) Inflation will fall,and real GDP will rise. 
A) Inflation will rise,and real GDP will fall. 
B) Inflation will rise,and real GDP will rise. 
C) Inflation will fall,and real GDP will fall. 
D) Inflation will fall,and real GDP will rise.

Question 14

Which of the following would be the source of a "real" business cycle?

Accepted Answer

A) changes in technology 
B) anticipated expansionary monetary policy 
C) unanticipated expansionary monetary policy 
D) unanticipated contractionary monetary policy 
A) changes in technology 
B) anticipated expansionary monetary policy 
C) unanticipated expansionary monetary policy 
D) unanticipated contractionary monetary policy

Question 15

The expansionary monetary and fiscal policies of the 1960s resulted in

Accepted Answer

A) high inflation rates and high rates of unemployment. 
B) low inflation rates and low rates of unemployment. 
C) low inflation rates and high rates of unemployment. 
D) high inflation rates and low rates of unemployment. 
A) high inflation rates and high rates of unemployment. 
B) low inflation rates and low rates of unemployment. 
C) low inflation rates and high rates of unemployment. 
D) high inflation rates and low rates of unemployment.

Question 16

When a central bank makes joint decisions with the government's Treasury department,

Accepted Answer

A) the central bank risks losing credibility. 
B) the central bank is asserting its independence. 
C) the government enhances its credibility. 
D) the government loses its ability to conduct fiscal policy. 
A) the central bank risks losing credibility. 
B) the central bank is asserting its independence. 
C) the government enhances its credibility. 
D) the government loses its ability to conduct fiscal policy.

Question 17

If changes in inflation are higher than expected,

Accepted Answer

A) the short-run Phillips curve will be positively sloped,but not vertical. 
B) the short-run Phillips curve will be negatively sloped. 
C) the short-run Phillips curve will be vertical. 
D) the long-run Phillips curve will be negatively sloped. 
A) the short-run Phillips curve will be positively sloped,but not vertical. 
B) the short-run Phillips curve will be negatively sloped. 
C) the short-run Phillips curve will be vertical. 
D) the long-run Phillips curve will be negatively sloped.

Question 18

Robert Shiller posed the following question to workers: "Imagine that next year the inflation rate unexpectedly doubles.How long would it probably take,in these times,before your income is increased enough so that you can afford the same things as you do today?" Shiller found that ________ percent of the workers he interviewed reported that it would take several years to restore the purchasing power of their wages or that this power would never be restored.

Accepted Answer

A) 25 
B) 42 
C) 64 
D) 81 
A) 25 
B) 42 
C) 64 
D) 81

Question 19

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

Accepted Answer

A) had adaptive expectations. 
B) had rational expectations and that they trusted Fed announcements. 
C) preferred high unemployment to high inflation. 
D) Both A and B are correct answers. 
A) had adaptive expectations. 
B) had rational expectations and that they trusted Fed announcements. 
C) preferred high unemployment to high inflation. 
D) Both A and B are correct answers.

Question 20

According to economists Robert Lucas and Thomas Sargent,when are the gains to accurately forecasting inflation highest?

Accepted Answer

A) when inflation is high and unstable 
B) when inflation is low 
C) when inflation is moderate but stable 
D) when inflation is high and stable 
A) when inflation is high and unstable 
B) when inflation is low 
C) when inflation is moderate but stable 
D) when inflation is high and stable

If the Phillips curve represents a "structural relationship," then

Figure 17-5 -Refer to Figure 17-5.Consider the Phillips curves shown in the above graph.We can conclude from this graph that

An increase in the expected inflation rate will

Under Alan Greenspan,the Fed strived to hit its goals of price stability and high employment through

An increase in expected inflation will

One problem with deflation is that it can raise the real value of debt.

If unemployment persists for a long period of time,the natural rate of unemployment rises.

All other factors held constant,increased growth in aggregate demand will

During the 1960s,when confronted with moderate and stable inflation,people tended to form adaptive expectations of future inflation rates.

With which of the following statements would a "real business cycle" theorist most closely agree?

If expected inflation rises,the long-run Phillips curve will

If the economy experiences a negative supply shock,which of the following will be true?

Which of the following would be the source of a "real" business cycle?

The expansionary monetary and fiscal policies of the 1960s resulted in

When a central bank makes joint decisions with the government's Treasury department,

If changes in inflation are higher than expected,

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

According to economists Robert Lucas and Thomas Sargent,when are the gains to accurately forecasting inflation highest?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting,and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Macroeconomics in an Open Economy

The International Financial System

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Exam 17: Inflation,unemployment,and Federal Reserve Policy

If the Phillips curve represents a "structural relationship," then

Figure 17-5 -Refer to Figure 17-5.Consider the Phillips curves shown in the above graph.We can conclude from this graph that

An increase in the expected inflation rate will

Under Alan Greenspan,the Fed strived to hit its goals of price stability and high employment through

An increase in expected inflation will

One problem with deflation is that it can raise the real value of debt.

If unemployment persists for a long period of time,the natural rate of unemployment rises.

All other factors held constant,increased growth in aggregate demand will

During the 1960s,when confronted with moderate and stable inflation,people tended to form adaptive expectations of future inflation rates.

With which of the following statements would a "real business cycle" theorist most closely agree?

If expected inflation rises,the long-run Phillips curve will

If the economy experiences a negative supply shock,which of the following will be true?

Which of the following would be the source of a "real" business cycle?

The expansionary monetary and fiscal policies of the 1960s resulted in

When a central bank makes joint decisions with the government's Treasury department,

If changes in inflation are higher than expected,

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

According to economists Robert Lucas and Thomas Sargent,when are the gains to accurately forecasting inflation highest?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting,and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Macroeconomics in an Open Economy

The International Financial System

Filters