Question 1

The restrictive monetary policy followed by the Fed in the early 1980s

Accepted Answer

A)   reduced both unemployment and inflation.
B)   reduced inflation significantly, but at the cost of a severe recession.
C)   reduced unemployment significantly, but at the cost of higher inflation.
D)   raised both unemployment and inflation.E) All of the above
F) A) and C)

Question 2

The long-run Phillips curve would shift left if

Accepted Answer

A)   the money supply increased or if the minimum wage was reduced.
B)   the money supply increased but not if the minimum wage was reduced.
C)   the minimum wage was reduced but not if the money supply increased.
D)   None of the above is correct.E) None of the above
F) B) and D)

Question 3

The economy will move to a point on the short-run Phillips curve where unemployment is higher if

Accepted Answer

A)   the inflation rate decreases.
B)   the government increases its expenditures.
C)   the Fed increases the money supply.
D)   None of the above is correct.E) C) and D)
F) B) and C)

Question 4

Samuelson and Solow argued that a combination of low unemployment and low inflation

Accepted Answer

A)   was impossible given the historical data as summarized by the Phillips curve.
B)   could be achieved with an "appropriate" fiscal policy.
C)   could be achieved with an "appropriate" monetary policy.
D)   could be achieved with an "appropriate" mix of monetary and fiscal policies.E) A) and C)
F) All of the above

Question 5

Suppose expected inflation and actual inflation are both low, and unemployment is at its natural rate. If the Fed then pursues an expansionary monetary policy, which of the following results would be expected in the short run?

Accepted Answer

A)   The short-run Phillips curve would shift to the left.
B)   The short-run Phillips curve would shift to the right.
C)   The economy would move up and to the left along a given short-run Phillips curve.
D)   The economy would move down and to the right along a given short-run Phillips curve.E) B) and C)
F) None of the above

Question 6

Suppose expected inflation and actual inflation are both relatively high, and unemployment is at its natural rate. If the Fed then pursues a contractionary monetary policy, which of the following results would be expected in the short run?

Accepted Answer

A)   Expected inflation would exceed actual inflation, and unemployment would exceed its natural rate.
B)   Expected inflation would exceed actual inflation, and unemployment would be below its natural rate.
C)   Actual inflation would exceed expected inflation, and unemployment would exceed its natural rate.
D)   Actual inflation would exceed expected inflation, and unemployment would be below its natural rate.E) B) and C)
F) A) and C)

Question 7

Other things the same, if the Fed increases the rate at which it increases the money supply then the short-run Phillips curve shifts right in the long run.

Accepted Answer

A) True 
 B)False

Question 8

In the 1970s, the Fed accommodated a(n)

Accepted Answer

A)   adverse supply shock and so contributed to higher inflation.
B)   adverse supply shock and so contributed to lower inflation.
C)   favorable supply shock and so contributed to higher inflation.
D)   favorable supply shock and so contributed to lower inflation.E) A) and D)
F) All of the above

Question 9

In the long run, a decrease in the money supply growth rate

Accepted Answer

A)   increases inflation and shifts the short-run Phillips curve right.
B)   increases inflation and shifts the short-run Phillips curve left.
C)   decreases inflation and shifts the short-run Philips curve right.
D)   decreases inflation and shifts the short-run Phillips curve left.E) A) and D)
F) A) and C)

Question 10

Which of the following is downward-sloping?

Accepted Answer

A)   both the long-run Phillips curve and the short-run Phillips curve
B)   neither the long-run Phillips curve 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) A) and B)
F) A) and C)

Question 11

In the short run,

Accepted Answer

A)   unemployment and inflation are positively related. In the long run they are largely unrelated problems.
B)   and in the long run inflation and unemployment are positively related.
C)   unemployment and inflation are negatively related. In the long run they are largely unrelated problems.
D)   and in the long run inflation and unemployment are negatively related.E) A) and B)
F) B) and D)

Question 12

The natural rate of unemployment

Accepted Answer

A)   is constant over time.
B)   varies over time, but can't be changed by the government.
C)   is the unemployment rate that the economy tends to move to in the long run.
D)   depends on the rate at which the Fed increases the money supply.E) A) and B)
F) B) and C)

Question 13

Moving from the late 1960s to 1970-1973,

Accepted Answer

A)   inflation remained high while the unemployment rate was lower than in the late 1960s.
B)   inflation remained high while the unemployment rate was higher than in the late 1960s.
C)   inflation remained low while the unemployment rate was lower than in the late 1960s.
D)   inflation remained low while the unemployment rate was higher than in the late 1960s.E) B) and D)
F) None of the above

Question 14

The position of the long-run Phillips curve and the long-run aggregate supply curve both depend on

Accepted Answer

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

Question 15

Which of the following would reduce the natural rate of unemployment?

Accepted Answer

A)   both an increase in the rate of money growth and increased unemployment compensation
B)   an increase in the rate of money growth but not increased unemployment compensation
C)   an increase in unemployment compensation but not an increase in the rate of money growth.
D)   neither an increase in unemployment compensation nor an increase in the rate of money growth.E) B) and C)
F) All of the above

Question 16

Figure 17-1. 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 17-1. Assuming the price level in the previous year was 100, point G on the right-hand graph corresponds to

Accepted Answer

A)   point A on the left-hand graph.
B)   point B on the left-hand graph.
C)   point C on the left-hand graph.
D)   point D on the left-hand graph.E) B) and D)
F) A) and C)

Question 17

If the natural rate of unemployment falls,

Accepted Answer

A)   both the short-run and long-run Phillips curves shift left.
B)   the short-run Phillips curve shifts left, the long-run Phillips curve is unchanged.
C)   the short-run Phillips curve is unchanged, the long-run Phillips curve shifts right.
D)   the short-run and the long-run Phillips curves shift right.E) A) and B)
F) B) and C)

Question 18

The government of Murkland considers two policies. Policy A would shift AD right by 300 units while policy B would shift AD right by 200 units. According to the short-run Phillips curve, policy A will lead

Accepted Answer

A)   to a lower unemployment rate and a lower inflation rate than policy B.
B)   to a lower unemployment rate and a higher inflation rate than policy B.
C)   to a higher unemployment rate and lower inflation rate than policy B.
D)   to a higher unemployment rate and higher inflation rate than policy B.E) C) and D)
F) B) and C)

Question 19

Which of the following shifts aggregate supply to the right?

Accepted Answer

A)   a decline in the price of imported natural resources
B)   a technological advance
C)   an older labor force that leaves jobs less frequently
D)   All of the above are correct.E) B) and D)
F) None of the above

Question 20

If there is an adverse supply shock and the Federal Reserve responds by increasing the growth rate of the money supply, then in the short run the Federal Reserve's action

Accepted Answer

A)   lowers both inflation and unemployment.
B)   lowers inflation but raises unemployment.
C)   raises inflation but lowers unemployment.
D)   raises both inflation and unemployment.E) A) and D)
F) All of the above

Exam 17: The Short-Run Trade-Off Between Inflation and Unemployment

Which of the following shifts aggregate supply to the right?

Correct Answer
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Suppose expected inflation and actual inflation are both low, and unemployment is at its natural rate. If the Fed then pursues an expansionary monetary policy, which of the following results would be expected in the short run?

Correct Answer
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Which of the following would reduce the natural rate of unemployment?

Correct Answer
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The government of Murkland considers two policies. Policy A would shift AD right by 300 units while policy B would shift AD right by 200 units. According to the short-run Phillips curve, policy A will lead

Correct Answer
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The long-run Phillips curve would shift left if

Correct Answer
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In the short run,

Correct Answer
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Correct Answer
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If the natural rate of unemployment falls,

Correct Answer
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If there is an adverse supply shock and the Federal Reserve responds by increasing the growth rate of the money supply, then in the short run the Federal Reserve's action

Correct Answer
verified

In the long run, a decrease in the money supply growth rate

Correct Answer
verified

The restrictive monetary policy followed by the Fed in the early 1980s

Correct Answer
verified

Moving from the late 1960s to 1970-1973,

Correct Answer
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The natural rate of unemployment

Correct Answer
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Which of the following is downward-sloping?

Correct Answer
verified

Samuelson and Solow argued that a combination of low unemployment and low inflation

Correct Answer
verified

The economy will move to a point on the short-run Phillips curve where unemployment is higher if

Correct Answer
verified

Suppose expected inflation and actual inflation are both relatively high, and unemployment is at its natural rate. If the Fed then pursues a contractionary monetary policy, which of the following results would be expected in the short run?

Correct Answer
verified

Other things the same, if the Fed increases the rate at which it increases the money supply then the short-run Phillips curve shifts right in the long run.

Correct Answer
verified

In the 1970s, the Fed accommodated a(n)

Correct Answer
verified

The position of the long-run Phillips curve and the long-run aggregate supply curve both depend on

Correct Answer
verified

Exam 17: The Short-Run Trade-Off Between Inflation and Unemployment

Which of the following shifts aggregate supply to the right?

Correct AnswerverifiedShow Answer

Suppose expected inflation and actual inflation are both low, and unemployment is at its natural rate. If the Fed then pursues an expansionary monetary policy, which of the following results would be expected in the short run?

Correct AnswerverifiedShow Answer

Which of the following would reduce the natural rate of unemployment?

Correct AnswerverifiedShow Answer

The government of Murkland considers two policies. Policy A would shift AD right by 300 units while policy B would shift AD right by 200 units. According to the short-run Phillips curve, policy A will lead

Correct AnswerverifiedShow Answer

The long-run Phillips curve would shift left if

Correct AnswerverifiedShow Answer

In the short run,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the natural rate of unemployment falls,

Correct AnswerverifiedShow Answer

If there is an adverse supply shock and the Federal Reserve responds by increasing the growth rate of the money supply, then in the short run the Federal Reserve's action

Correct AnswerverifiedShow Answer

In the long run, a decrease in the money supply growth rate

Correct AnswerverifiedShow Answer

The restrictive monetary policy followed by the Fed in the early 1980s

Correct AnswerverifiedShow Answer

Moving from the late 1960s to 1970-1973,

Correct AnswerverifiedShow Answer

The natural rate of unemployment

Correct AnswerverifiedShow Answer

Which of the following is downward-sloping?

Correct AnswerverifiedShow Answer

Samuelson and Solow argued that a combination of low unemployment and low inflation

Correct AnswerverifiedShow Answer

The economy will move to a point on the short-run Phillips curve where unemployment is higher if

Correct AnswerverifiedShow Answer

Suppose expected inflation and actual inflation are both relatively high, and unemployment is at its natural rate. If the Fed then pursues a contractionary monetary policy, which of the following results would be expected in the short run?

Correct AnswerverifiedShow Answer

Other things the same, if the Fed increases the rate at which it increases the money supply then the short-run Phillips curve shifts right in the long run.

Correct AnswerverifiedShow Answer

In the 1970s, the Fed accommodated a(n)

Correct AnswerverifiedShow Answer

The position of the long-run Phillips curve and the long-run aggregate supply curve both depend on

Correct AnswerverifiedShow Answer

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