Question 1

Figure 36-4 
-Refer to figure 36-4.In this order,which curve is a long-run Phillips curve and which is a short-run Phillips curve?

Accepted Answer

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

Question 2

Are the effects of an increase in aggregate demand in the aggregate demand and aggregate supply model consistent with the Phillips curve?
 Explain.

Accepted Answer

Consider what happens when the aggregate...

Question 3

Figure 36-1.The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves.On the right-hand diagram,U represents the unemployment rate.  
-Refer to Figure 36-1.Suppose points F and G on the right-hand graph represent two possible outcomes for an imaginary economy in the year 2012,and those two points correspond to points B and C,respectively,on the left-hand graph.Also suppose we know that the price index equaled 120 in 2011.Then the numbers 115 and 130 on the vertical axis of the left-hand graph would have to be replaced by

Accepted Answer

A)  155 and 175,respectively.
B)  138 and 156,respectively.
C)  137.5 and 154.75,respectively.
D)  135 and 150,respectively.E) B) and C)
F) A) and D)

Question 4

A decrease in the growth rate of the money supply eventually causes the short-run Phillips curve to shift right.

Accepted Answer

A) True 
 B)False

Question 5

Figure 36-3.The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves.On the left-hand diagram,Y represents output and on the right-hand diagram,U represents the unemployment rate.  
-Refer to Figure 36-3.Assume the figure charts possible outcomes for the year 2018.In 2018,the economy is at point B on the left-hand graph,which corresponds to point B on the right-hand graph.Also,point A on the left-hand graph corresponds to A on the right-hand graph.The price level in the year 2018 is

Accepted Answer

A)  155.56.
B)  159.00.
C)  163.50.
D)  170.04.E) A) and D)
F) A) and C)

Question 6

For a number of years Canada and many European countries have had higher average unemployment rates than the United States.The Phillips curve suggests that these countries

Accepted Answer

A)  have higher average inflation rates than the United States.
B)  have long-run Phillips curves to the right of the United States'.
C)  may have less generous unemployment compensation or lower minimum wages.
D)  All of the above are consistent with the evidence on unemployment rates.E) A) and C)
F) B) and C)

Question 7

In the long run a reduction in the money supply growth rate affects

Accepted Answer

A)  the inflation rate and the natural rate of unemployment.
B)  the inflation rate but not the natural rate of unemployment.
C)  neither the inflation rate nor the natural rate of unemployment.
D)  the natural rate of unemployment,but not the inflation rate.E) B) and C)
F) A) and B)

Question 8

If inflation expectations decline,then the short-run Phillips curve shifts

Accepted Answer

A)  left,so that at any inflation rate unemployment is lower in the short run than before.
B)  right,so that at any inflation rate unemployment is lower in the short run than before.
C)  right,so that at any inflation rate unemployment is higher in the short run than before.
D)  left,so that at any inflation rate unemployment is higher in the short run than before.E) A) and B)
F) B) and C)

Question 9

Suppose that the economy is at an inflation rate such that unemployment is above the natural rate.How does the economy return to the natural rate of unemployment if this lower inflation rate persists?
 Use sticky-wage theory to explain your answer.

Accepted Answer

If unemployment is above its natural rat...

Question 10

In response to the financial crisis of 2007-2008,policymakers used

Accepted Answer

A)  expansionary monetary policy and expansionary fiscal policy.
B)  expansionary monetary policy and contractionary fiscal policy.
C)  contractionary monetary policy and expansionary fiscal policy.
D)  contractionary monetary policy and contractionary fiscal policy.E) B) and D)
F) None of the above

Question 11

Other things the same,an increase in aggregate demand reduces unemployment and raises inflation in the short run.

Accepted Answer

A) True 
 B)False

Question 12

Some countries have inflation around or in excess of 8 percent.Suppose that the sacrifice ratio is 2.5.What is the cost of reducing inflation from 8 percent to 2 percent?
 In your answer,define the sacrifice ratio and explain how you found the cost of inflation reduction.

Accepted Answer

The sacrifice ratio gives the annual per...

Question 13

If people anticipate higher inflation,but inflation remains the same then

Accepted Answer

A)  the short-run Phillips curve would shift right and unemployment would rise.
B)  the short-run Phillips curve would shift right and unemployment would fall.
C)  the short-run Phillips curve would shift left and unemployment would rise.
D)  the short-run Phillips curve would shift left and unemployment would fall.E) A) and B)
F) B) and C)

Question 14

If policymakers decrease aggregate demand,then in the long run

Accepted Answer

A)  prices will be lower and unemployment will be higher.
B)  prices will be lower and unemployment will be unchanged.
C)  prices and unemployment will be unchanged.
D)  None of the above is correct.E) All of the above
F) None of the above

Question 15

Contractionary monetary policy

Accepted Answer

A)  leads to disinflation and makes the short-run Phillips curve shift right.
B)  leads to disinflation and makes the short-run Phillips curve shift left.
C)  does not lead to disinflation but makes the short-run Phillips curve shift right.
D)  does not lead to disinflation but makes the short-run Phillips curve shift left.E) B) and D)
F) A) and B)

Question 16

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) C) and D)
F) None of the above

Question 17

A decrease in government expenditures serves as an example of an adverse supply shock.

Accepted Answer

A) True 
 B)False

Question 18

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 19

Which of the following is correct if there is a favorable supply shock?

Accepted Answer

A)  the short-run aggregate supply curve and the short-run Phillips curve both shift right.
B)  the short-run aggregate supply curve and the short-run Phillips curve both shift left.
C)  the short-run aggregate supply curve shifts right and the short-run Phillips curve shifts left.
D)  the short-run aggregate supply curve shifts left and the short-run Phillips curve shifts right.E) None of the above
F) B) and C)

Question 20

Figure 36-5
Use the graph below to answer the following questions.

-Refer to Figure 36-5.The money supply growth rate is greatest at

Accepted Answer

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

Exam 36: The Short-Run Trade-Off Between Inflation and Unemployment

Other things the same,an increase in aggregate demand reduces unemployment and raises inflation in the short run.

Correct Answer
verified

Correct Answer
verified

If the natural rate of unemployment falls,

Correct Answer
verified

Some countries have inflation around or in excess of 8 percent.Suppose that the sacrifice ratio is 2.5.What is the cost of reducing inflation from 8 percent to 2 percent? In your answer,define the sacrifice ratio and explain how you found the cost of inflation reduction.

Correct Answer
verified
The sacrifice ratio gives the annual per...
View Answer

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

Correct Answer
verified

If people anticipate higher inflation,but inflation remains the same then

Correct Answer
verified

If policymakers decrease aggregate demand,then in the long run

Correct Answer
verified

For a number of years Canada and many European countries have had higher average unemployment rates than the United States.The Phillips curve suggests that these countries

Correct Answer
verified

Contractionary monetary policy

Correct Answer
verified

A decrease in government expenditures serves as an example of an adverse supply shock.

Correct Answer
verified

Suppose that the economy is at an inflation rate such that unemployment is above the natural rate.How does the economy return to the natural rate of unemployment if this lower inflation rate persists? Use sticky-wage theory to explain your answer.

Correct Answer
verified
If unemployment is above its natural rat...
View Answer

Figure 36-5 Use the graph below to answer the following questions. -Refer to Figure 36-5.The money supply growth rate is greatest at

Correct Answer
verified

Figure 36-4 -Refer to figure 36-4.In this order,which curve is a long-run Phillips curve and which is a short-run Phillips curve?

Correct Answer
verified

Are the effects of an increase in aggregate demand in the aggregate demand and aggregate supply model consistent with the Phillips curve? Explain.

Correct Answer
verified
Consider what happens when the aggregate...
View Answer

Correct Answer
verified

In response to the financial crisis of 2007-2008,policymakers used

Correct Answer
verified

Which of the following is correct if there is a favorable supply shock?

Correct Answer
verified

In the long run a reduction in the money supply growth rate affects

Correct Answer
verified

A decrease in the growth rate of the money supply eventually causes the short-run Phillips curve to shift right.

Correct Answer
verified

If inflation expectations decline,then the short-run Phillips curve shifts

Correct Answer
verified

Exam 36: The Short-Run Trade-Off Between Inflation and Unemployment

Other things the same,an increase in aggregate demand reduces unemployment and raises inflation in the short run.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the natural rate of unemployment falls,

Correct AnswerverifiedShow Answer

Some countries have inflation around or in excess of 8 percent.Suppose that the sacrifice ratio is 2.5.What is the cost of reducing inflation from 8 percent to 2 percent? In your answer,define the sacrifice ratio and explain how you found the cost of inflation reduction.

Correct AnswerverifiedThe sacrifice ratio gives the annual per...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

If people anticipate higher inflation,but inflation remains the same then

Correct AnswerverifiedShow Answer

If policymakers decrease aggregate demand,then in the long run

Correct AnswerverifiedShow Answer

For a number of years Canada and many European countries have had higher average unemployment rates than the United States.The Phillips curve suggests that these countries

Correct AnswerverifiedShow Answer

Contractionary monetary policy

Correct AnswerverifiedShow Answer

A decrease in government expenditures serves as an example of an adverse supply shock.

Correct AnswerverifiedShow Answer

Suppose that the economy is at an inflation rate such that unemployment is above the natural rate.How does the economy return to the natural rate of unemployment if this lower inflation rate persists? Use sticky-wage theory to explain your answer.

Correct AnswerverifiedIf unemployment is above its natural rat...View AnswerShow Answer

Figure 36-5 Use the graph below to answer the following questions. -Refer to Figure 36-5.The money supply growth rate is greatest at

Correct AnswerverifiedShow Answer

Figure 36-4 -Refer to figure 36-4.In this order,which curve is a long-run Phillips curve and which is a short-run Phillips curve?

Correct AnswerverifiedShow Answer

Are the effects of an increase in aggregate demand in the aggregate demand and aggregate supply model consistent with the Phillips curve? Explain.

Correct AnswerverifiedConsider what happens when the aggregate...View AnswerShow Answer

Correct AnswerverifiedShow Answer

In response to the financial crisis of 2007-2008,policymakers used

Correct AnswerverifiedShow Answer

Which of the following is correct if there is a favorable supply shock?

Correct AnswerverifiedShow Answer

In the long run a reduction in the money supply growth rate affects

Correct AnswerverifiedShow Answer

A decrease in the growth rate of the money supply eventually causes the short-run Phillips curve to shift right.

Correct AnswerverifiedShow Answer

If inflation expectations decline,then the short-run Phillips curve shifts

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The sacrifice ratio gives the annual per...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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If unemployment is above its natural rat...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Consider what happens when the aggregate...
View Answer

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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