Question 1

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.E) B) and C)
F) A) and B)

Question 2

A policy change that reduces the natural rate of unemployment shifts both the long-run aggregate-supply curve and the long-run Phillips curve left.

Accepted Answer

A) True 
 B)False

Question 3

If a central bank increases the money supply,then

Accepted Answer

A)   prices,output,and unemployment rise.
B)   prices and output rise and unemployment falls.
C)   prices rise and output and unemployment fall.
D)   prices fall and output and unemployment rise.E) None of the above
F) All of the above

Question 4

A country is likely to have a lower sacrifice ratio if

Accepted Answer

A)   contracts are shorter,and people believe the central bank will reduce inflation.
B)   contracts are shorter,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 longer,and people believe the central bank will reduce inflation .E) A) and B)
F) A) and C)

Question 5

If a central bank wants to counter the change in the price level caused by an adverse supply shock,it could change the money supply to shift

Accepted Answer

A)   aggregate demand right.
B)   aggregate demand left.
C)   aggregate supply right.
D)   aggregate supply left.E) A) and B)
F) B) and C)

Question 6

The short-run Phillips curve indicates that expansionary monetary policy will temporarily raise the unemployment rate above its natural rate.

Accepted Answer

A) True 
 B)False

Question 7

The position of the long-run Phillips curve depends on

Accepted Answer

A)   the inflation rate and the natural rate of unemployment.
B)   the inflation rate but not the natural rate of unemployment.
C)   the natural rate of unemployment,but not the inflation rate.
D)   neither the natural rate of unemployment nor the inflation rate.E) None of the above
F) C) and D)

Question 8

Which of the following would cause the price level to rise and output to fall in the short run?

Accepted Answer

A)   an increase in the money supply
B)   a decrease in the money supply
C)   an adverse supply shock
D)   a favorable supply shockE) B) and D)
F) None of the above

Question 9

If a central bank decreases the money supply in response to an adverse supply shock,which of the following does its response move back closer to its value before the shock?

Accepted Answer

A)   both the price level and output
B)   the price level but not output
C)   output but not the price level
D)   neither output nor the price levelE) A) and B)
F) A) and C)

Question 10

Which of the following would we not expect if government policy moved the economy up along a given short-run Phillips curve?

Accepted Answer

A)   Paul reads in the newspaper that the central bank recently raised the money supply.
B)   Louisa gets fewer job offers
C)   Joey makes larger increases in the prices at his health food store.
D)   Jessica's nominal wage increase is larger.E) None of the above
F) B) and D)

Question 11

An increase in expected inflation shifts

Accepted Answer

A)   the long-run Phillips curve right.
B)   the short-run Phillips curve right.
C)   neither the short-run nor long-run Phillips curve right.
D)   both the short-run and long-run Phillips curve right.E) C) and D)
F) B) and C)

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.E) B) and C)
F) All of the above

Question 13

Figure 35-3  Refer to figure 35-3.In this order,which curve is a long-run Phillips curve and which is a short-run Phillips curve?
a.
A,B
b.
A,D
c.
C,B
d.
None of the above is correct.
ANS: B DIF: 1 REF: 35-2 NAT: Analytic
LOC: Unemployment and inflation TOP: Short-run Phillips curve | Long-run Phillips curve
MSC: Definitional
-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 curveE) None of the above
F) B) and C)

Question 14

In the long run,the natural rate of unemployment depends primarily on the growth rate of the money supply.

Accepted Answer

A) True 
 B)False

Question 15

Milton Friedman and Edmund Phelps argued in the late 1960s that in the long run the Phillips curve is

Accepted Answer

A)   downward-sloping,which implies that monetary and fiscal policies can influence the level of unemployment in the long run.
B)   downward-sloping,which implies that monetary and fiscal policies cannot influence the rate of inflation in the long run.
C)   vertical,which implies that monetary and fiscal policies cannot influence the level of unemployment in the long run.
D)   vertical,which implies that monetary and fiscal policies cannot influence the rate of inflation in the long run.E) B) and C)
F) C) and D)

Question 16

According to the Friedman-Phelps analysis,in the long run actual inflation equals expected inflation and unemployment is at its natural rate.

Accepted Answer

A) True 
 B)False

Question 17

In 1980,the combination of inflation and unemployment the U.S.was experiencing

Accepted Answer

A)   resulted from a leftward shift of the short-run Phillips curve.
B)   was consistent with feasible inflation-unemployment combinations provided by the Phillips curve of the 1960s.
C)   followed two supply shocks that were triggered by the Organization of Petroleum Exporting Countries.
D)   All of the above are correct.E) A) and D)
F) C) and D)

Question 18

In the long run,an increase in the money supply growth rate

Accepted Answer

A)   shifts both the long-run and the short-run Phillips curves right.
B)   shifts the long-run Phillips curve left and the short-run Phillips curve right.
C)   shifts the long-run Phillips curve right and the short-run Phillips curve left.
D)   None of the above is correct.E) All of the above
F) B) and C)

Question 19

Figure 35-2
Use the pair of diagrams below to answer the following questions.  
-Refer to Figure 35-2.If the economy starts at C and 1,then in the short run,a decrease in government expenditures moves the economy to

Accepted Answer

A)   D and 2
B)   D and 3.
C)   E and 3.
D)   None of the above is correct.E) A) and D)
F) A) and B)

Question 20

What did Friedman and Phelps predict would happen if policymakers tried to move the economy upward along the Phillips curve? Did the behavior of the economy in the late 1960s and the 1970s prove them wrong?

Accepted Answer

Friedman and Phelps predicted that,over ...

Exam 35: The Short-Run Trade-Off Between Inflation and Unemployment

If a central bank decreases the money supply in response to an adverse supply shock,which of the following does its response move back closer to its value before the shock?

Correct Answer
verified

Which of the following would cause the price level to rise and output to fall in the short run?

Correct Answer
verified

An increase in expected inflation shifts

Correct Answer
verified

If a central bank increases the money supply,then

Correct Answer
verified

According to the Friedman-Phelps analysis,in the long run actual inflation equals expected inflation and unemployment is at its natural rate.

Correct Answer
verified

Figure 35-2 Use the pair of diagrams below to answer the following questions. -Refer to Figure 35-2.If the economy starts at C and 1,then in the short run,a decrease in government expenditures moves the economy to

Correct Answer
verified

If a central bank wants to counter the change in the price level caused by an adverse supply shock,it could change the money supply to shift

Correct Answer
verified

In the long run,the natural rate of unemployment depends primarily on the growth rate of the money supply.

Correct Answer
verified

In 1980,the combination of inflation and unemployment the U.S.was experiencing

Correct Answer
verified

Milton Friedman and Edmund Phelps argued in the late 1960s that in the long run the Phillips curve is

Correct Answer
verified

The short-run Phillips curve indicates that expansionary monetary policy will temporarily raise the unemployment rate above its natural rate.

Correct Answer
verified

What did Friedman and Phelps predict would happen if policymakers tried to move the economy upward along the Phillips curve? Did the behavior of the economy in the late 1960s and the 1970s prove them wrong?

Correct Answer
verified
Friedman and Phelps predicted that,over ...
View Answer

If the natural rate of unemployment falls,

Correct Answer
verified

A country is likely to have a lower sacrifice ratio if

Correct Answer
verified

Which of the following would we not expect if government policy moved the economy up along a given short-run Phillips curve?

Correct Answer
verified

A policy change that reduces the natural rate of unemployment shifts both the long-run aggregate-supply curve and the long-run Phillips curve left.

Correct Answer
verified

Correct Answer
verified

In the long run,an increase in the money supply growth rate

Correct Answer
verified

The position of the long-run Phillips curve depends on

Correct Answer
verified

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

Correct Answer
verified

Exam 35: The Short-Run Trade-Off Between Inflation and Unemployment

If a central bank decreases the money supply in response to an adverse supply shock,which of the following does its response move back closer to its value before the shock?

Correct AnswerverifiedShow Answer

Which of the following would cause the price level to rise and output to fall in the short run?

Correct AnswerverifiedShow Answer

An increase in expected inflation shifts

Correct AnswerverifiedShow Answer

If a central bank increases the money supply,then

Correct AnswerverifiedShow Answer

According to the Friedman-Phelps analysis,in the long run actual inflation equals expected inflation and unemployment is at its natural rate.

Correct AnswerverifiedShow Answer

Figure 35-2 Use the pair of diagrams below to answer the following questions. -Refer to Figure 35-2.If the economy starts at C and 1,then in the short run,a decrease in government expenditures moves the economy to

Correct AnswerverifiedShow Answer

If a central bank wants to counter the change in the price level caused by an adverse supply shock,it could change the money supply to shift

Correct AnswerverifiedShow Answer

In the long run,the natural rate of unemployment depends primarily on the growth rate of the money supply.

Correct AnswerverifiedShow Answer

In 1980,the combination of inflation and unemployment the U.S.was experiencing

Correct AnswerverifiedShow Answer

Milton Friedman and Edmund Phelps argued in the late 1960s that in the long run the Phillips curve is

Correct AnswerverifiedShow Answer

The short-run Phillips curve indicates that expansionary monetary policy will temporarily raise the unemployment rate above its natural rate.

Correct AnswerverifiedShow Answer

What did Friedman and Phelps predict would happen if policymakers tried to move the economy upward along the Phillips curve? Did the behavior of the economy in the late 1960s and the 1970s prove them wrong?

Correct AnswerverifiedFriedman and Phelps predicted that,over ...View AnswerShow Answer

If the natural rate of unemployment falls,

Correct AnswerverifiedShow Answer

A country is likely to have a lower sacrifice ratio if

Correct AnswerverifiedShow Answer

Which of the following would we not expect if government policy moved the economy up along a given short-run Phillips curve?

Correct AnswerverifiedShow Answer

A policy change that reduces the natural rate of unemployment shifts both the long-run aggregate-supply curve and the long-run Phillips curve left.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the long run,an increase in the money supply growth rate

Correct AnswerverifiedShow Answer

The position of the long-run Phillips curve depends on

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
Friedman and Phelps predicted that,over ...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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