Question 1

The short-run Phillips curve shows the combinations of

Accepted Answer

A)   unemployment and inflation that arise in the short run as aggregate demand shifts the economy along the short-run aggregate supply curve.
B)   unemployment and inflation that arise in the short run as short-run aggregate supply shifts the economy along the aggregate demand curve.
C)   real GDP and the price level that arise in the short run as short-run aggregate supply shifts the economy along the aggregate demand curve.
D)   None of the above is correct.E) None of the above
F) C) and D)

Question 2

If expected inflation increases, which of the following shifts right?

Accepted Answer

A)   both the short-run and the long-run Phillips curves
B)   the short-run but not the long-run Phillips curve
C)   the long-run but not the short-run Phillips curve
D)   neither the long-run nor the short-run Phillips curveE) A) and D)
F) None of the above

Question 3

In the long run, if the Fed decreases the rate at which it increases the money supply,

Accepted Answer

A)   inflation will be lower.
B)   unemployment will be higher.
C)   real GDP will be lower.
D)   All of the above are correct.E) All of the above
F) A) and B)

Question 4

Which of the following would cause the price level to fall and output to rise 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) C) and D)
F) A) and B)

Question 5

If the minimum wage increased, then at any given rate of inflation

Accepted Answer

A)   both output and employment would be higher.
B)   neither output nor employment would be higher.
C)   output would be higher and unemployment would be lower.
D)   output would be lower and unemployment would be higher.E) A) and D)
F) B) and C)

Question 6

As the aggregate demand curve shifts leftward along a given aggregate supply curve,

Accepted Answer

A)   unemployment and inflation are higher.
B)   unemployment and inflation are lower.
C)   unemployment is higher and inflation is lower.
D)   unemployment is lower and inflation is higher.E) All of the above
F) None of the above

Question 7

If policymakers increase aggregate demand, then in the short run the price level

Accepted Answer

A)   falls and unemployment rises.
B)   and unemployment fall.
C)   and unemployment rise.
D)   rises and unemployment falls.E) C) and D)
F) B) and D)

Question 8

Disinflation is like

Accepted Answer

A)   slowing a car down, whereas deflation is like putting the car into reverse gear.
B)   maintaining a car's speed, whereas deflation is like slowing the car down.
C)   putting a car into reverse gear, whereas deflation is like slowing the car down.
D)   maintaining a car's speed, whereas deflation is like putting the car into reverse gear.E) A) and D)
F) C) and D)

Question 9

An adverse supply shock shifts the short-run Phillips curve to the

Accepted Answer

A)   right. This means the unemployment rate is higher at each inflation rate.
B)   right. This means the unemployment rate is lower at each inflation rate.
C)   left. This means the unemployment rate is higher at each inflation rate.
D)   left. This means the unemployment rate is lower at each inflation rate.E) A) and C)
F) A) and B)

Question 10

An adverse supply shock shifts the short-run Phillips curve right and the short-run aggregate-supply curve left.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is downward-sloping?

Accepted Answer

A)   both the long-run Phillips curve and the long-run aggregate-supply curve
B)   neither the long-run Phillips curve nor the long-run aggregate-supply curve
C)   the long-run Phillips curve, but not the long-run aggregate-supply curve
D)   the short-run Phillips curve, but not the long-run aggregate-supply curveE) B) and D)
F) A) and B)

Question 12

If the long-run Phillips curve shifts to the left, then for any given rate of money growth and inflation the economy has

Accepted Answer

A)   higher unemployment and lower output.
B)   higher unemployment and higher output.
C)   lower unemployment and lower output.
D)   lower unemployment and higher output.E) None of the above
F) All of the above

Question 13

The economy is in long-run equilibrium when Senator Soldout argues that the Fed should do more to fight unemployment. He argues that if the Fed increased the money supply faster, more workers would find jobs. The Senator's argument

Accepted Answer

A)   is completely correct.
B)   is completely wrong.
C)   is true for the short run but not the long run.
D)   is true for the long run but not the short run.E) A) and B)
F) A) and C)

Question 14

A rightward shift of the short-run aggregate-supply curve results in a more favorable trade-off between inflation and unemployment.

Accepted Answer

A) True 
 B)False

Question 15

If people believe that the central bank is going to reduce inflation

Accepted Answer

A)   the short-run Phillips curve shifts right and the sacrifice ratio will rise.
B)   the short-run Phillips curve shifts right and the sacrifice ratio will fall.
C)   the short-run Phillips curve shifts left and the sacrifice ratio will rise.
D)   the short-run Phillips curve shifts left and the sacrifice ratio will fall.E) None of the above
F) B) and D)

Question 16

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 17

Suppose that the central bank unexpectedly increases the growth rate of the money supply. In the short run the effects of this are shown by

Accepted Answer

A)   moving to the left along the short-run Phillips curve.
B)   moving to the right along the short-run Phillips curve.
C)   shifting the short-run Phillips curve to the right.
D)   shifting the short-run Phillips curve to the left.E) B) and C)
F) All of the above

Question 18

Samuelson and Solow believed that the Phillips curve offered policymakers a menu of possible economic outcomes.

Accepted Answer

A) True 
 B)False

Question 19

Figure 17-3. 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 17-3. 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) None of the above
F) A) and B)

Question 20

According to the Phillips curve, unemployment and inflation are negatively related in

Accepted Answer

A)   the short run and in the long run.
B)   the short run, but not in the long run.
C)   the long run, but not in the short run.
D)   neither the long run nor the short run.E) B) and C)
F) A) and D)

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

Disinflation is like

Correct Answer
verified

If people believe that the central bank is going to reduce inflation

Correct Answer
verified

According to the Phillips curve, unemployment and inflation are negatively related in

Correct Answer
verified

In the long run, if the Fed decreases the rate at which it increases the money supply,

Correct Answer
verified

If policymakers increase aggregate demand, then in the short run the price level

Correct Answer
verified

The short-run Phillips curve shows the combinations of

Correct Answer
verified

Samuelson and Solow believed that the Phillips curve offered policymakers a menu of possible economic outcomes.

Correct Answer
verified

An adverse supply shock shifts the short-run Phillips curve right and the short-run aggregate-supply curve left.

Correct Answer
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Which of the following is downward-sloping?

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

Correct Answer
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Suppose that the central bank unexpectedly increases the growth rate of the money supply. In the short run the effects of this are shown by

Correct Answer
verified

A rightward shift of the short-run aggregate-supply curve results in a more favorable trade-off between inflation and unemployment.

Correct Answer
verified

If the minimum wage increased, then at any given rate of inflation

Correct Answer
verified

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

Correct Answer
verified

As the aggregate demand curve shifts leftward along a given aggregate supply curve,

Correct Answer
verified

If expected inflation increases, which of the following shifts right?

Correct Answer
verified

If the long-run Phillips curve shifts to the left, then for any given rate of money growth and inflation the economy has

Correct Answer
verified

An adverse supply shock shifts the short-run Phillips curve to the

Correct Answer
verified

Correct Answer
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The economy is in long-run equilibrium when Senator Soldout argues that the Fed should do more to fight unemployment. He argues that if the Fed increased the money supply faster, more workers would find jobs. The Senator's argument

Correct Answer
verified

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

Disinflation is like

Correct AnswerverifiedShow Answer

If people believe that the central bank is going to reduce inflation

Correct AnswerverifiedShow Answer

According to the Phillips curve, unemployment and inflation are negatively related in

Correct AnswerverifiedShow Answer

In the long run, if the Fed decreases the rate at which it increases the money supply,

Correct AnswerverifiedShow Answer

If policymakers increase aggregate demand, then in the short run the price level

Correct AnswerverifiedShow Answer

The short-run Phillips curve shows the combinations of

Correct AnswerverifiedShow Answer

Samuelson and Solow believed that the Phillips curve offered policymakers a menu of possible economic outcomes.

Correct AnswerverifiedShow Answer

An adverse supply shock shifts the short-run Phillips curve right and the short-run aggregate-supply curve left.

Correct AnswerverifiedShow Answer

Which of the following is downward-sloping?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose that the central bank unexpectedly increases the growth rate of the money supply. In the short run the effects of this are shown by

Correct AnswerverifiedShow Answer

A rightward shift of the short-run aggregate-supply curve results in a more favorable trade-off between inflation and unemployment.

Correct AnswerverifiedShow Answer

If the minimum wage increased, then at any given rate of inflation

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

As the aggregate demand curve shifts leftward along a given aggregate supply curve,

Correct AnswerverifiedShow Answer

If expected inflation increases, which of the following shifts right?

Correct AnswerverifiedShow Answer

If the long-run Phillips curve shifts to the left, then for any given rate of money growth and inflation the economy has

Correct AnswerverifiedShow Answer

An adverse supply shock shifts the short-run Phillips curve to the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The economy is in long-run equilibrium when Senator Soldout argues that the Fed should do more to fight unemployment. He argues that if the Fed increased the money supply faster, more workers would find jobs. The Senator's argument

Correct AnswerverifiedShow Answer

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