Question 1

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) B) and D)
F) C) and D)

Question 2

The short-run Phillips curve is based on the classical dichotomy.

Accepted Answer

A) True 
 B)False

Question 3

Phillips found a

Accepted Answer

A)   positive relation between unemployment and inflation in the United Kingdom.
B)   positive relation between unemployment and inflation in the United States.
C)   negative relation between unemployment and inflation in the United States.
D)   negative relation between unemployment and inflation in the United Kingdom.E) B) and C)
F) A) and D)

Question 4

In the long run,if there is an increase in the money supply growth rate,which of the following curves shifts right?

Accepted Answer

A)   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 short-run nor the long-run Phillips curvesE) A) and B)
F) A) and C)

Question 5

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 aggregate demand moves the economy to

Accepted Answer

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

Question 6

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

Accepted Answer

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

Question 7

Figure 35-5
Use the two graphs in the diagram to answer the following questions.  
-Refer to Figure 35-5.Starting from C and 3,in the long run,an increase in money supply growth moves the economy to

Accepted Answer

A)   A and 1.
B)   back to C and 3.
C)   D and 4.
D)   F and 5.E) None of the above
F) A) and D)

Question 8

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) B) and C)
F) A) and D)

Question 9

If the central bank increases the money supply,in the short run,output

Accepted Answer

A)   rises so unemployment rises.
B)   rises so unemployment falls.
C)   falls so unemployment rises.
D)   falls so unemployment falls.E) A) and B)
F) None of the above

Question 10

In the United States during the 1970s,expected inflation

Accepted Answer

A)   rose substantially.
B)   rose slightly.
C)   fell slightly.
D)   fell substantially.E) All of the above
F) A) and D)

Question 11

Ultimately,the change in unemployment associated with a change in inflation is due to

Accepted Answer

A)   the shape of the long-run aggregate supply curve.
B)   unanticipated inflation,not inflation per se.
C)   anticipated inflation,not inflation per se.
D)   a change in the natural rate of unemployment.E) B) and C)
F) A) and D)

Question 12

Disinflation would eventually cause

Accepted Answer

A)   the short-run and the long run Phillips curve to shift right.
B)   the short-run and the long run Phillips curve to shift left.
C)   the short-run Phillips curve but not the long run Phillips curve to shift right.
D)   the short-run Phillips curve but not the long run Phillips curve to shift left.E) C) and D)
F) A) and C)

Question 13

If the Federal Reserve increases the rate at which it increases the money supply,then unemployment is lower

Accepted Answer

A)   in the long run and the short run.
B)   in the long run but not the short run.
C)   in the short run but not the long run.
D)   in neither the short run nor the long run.E) B) and D)
F) None of the above

Question 14

The long-run response to a decrease in the money supply growth rate is shown by shifting

Accepted Answer

A)   the short-run and long-run Phillips curves left.
B)   the short-run and long-run Phillips curves right.
C)   only the short-run Phillips curve left.
D)   only the short-run Phillips curve right.E) A) and B)
F) A) and C)

Question 15

Any policy change that reduced the natural rate of unemployment

Accepted Answer

A)   would shift the long-run Phillips curve to the left.
B)   would shift the long-run aggregate-supply curve to the right.
C)   would be a policy change that improved the functioning of the labor market.
D)   All of the above are correct.E) A) and D)
F) A) and B)

Question 16

An adverse supply shock causes output to

Accepted Answer

A)   rise.To counter this a central bank would increase the money supply.
B)   rise.To counter this a central bank would decrease the money supply.
C)   fall.To counter this a central bank would increase the money supply.
D)   fall.To counter this a central bank would decrease the money supply.E) None of the above
F) A) and B)

Question 17

In the long run,which of the following would shift the long-run Phillips curve to the right?

Accepted Answer

A)   an increase in the minimum wage
B)   an increase in government spending
C)   an increase in the money supply
D)   a decrease in the money supplyE) None of the above
F) B) and C)

Question 18

If the government reduced the minimum wage and pursued expansionary monetary policy,then in the long run

Accepted Answer

A)   both the unemployment rate and the inflation rate would be higher.
B)   both the unemployment rate and the inflation rate would be lower.
C)   the unemployment rate would be higher and the inflation rate would be lower.
D)   the unemployment rate would be lower and the inflation rate would be higher.E) C) and D)
F) A) and B)

Question 19

Figure 35-5
Use the two graphs in the diagram to answer the following questions.  
-Refer to Figure 35-5.The economy would move from C to B

Accepted Answer

A)   in the short run if money supply growth increased unexpectedly.
B)   in the short run if money supply growth decreased unexpectedly.
C)   in the long run if money supply growth increases.
D)   in the long run if money supply growth decreases.E) A) and B)
F) None of the above

Question 20

The sacrifice ratio is the

Accepted Answer

A)   sum of the inflation and unemployment rates.
B)   inflation rate divided by the unemployment rate.
C)   number of percentage points annual output falls for each percentage point reduction in inflation.
D)   number of percentage points unemployment rises for each percentage point reduction in inflation.E) A) and D)
F) All of the above

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

In the short run

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In the United States during the 1970s,expected inflation

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The short-run Phillips curve is based on the classical dichotomy.

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In the long run,if there is an increase in the money supply growth rate,which of the following curves shifts right?

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An adverse supply shock causes output to

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If the government reduced the minimum wage and pursued expansionary monetary policy,then in the long run

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Figure 35-5 Use the two graphs in the diagram to answer the following questions. -Refer to Figure 35-5.Starting from C and 3,in the long run,an increase in money supply growth moves the economy to

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In the long run,which of the following would shift the long-run Phillips curve to the right?

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If the central bank increases the money supply,in the short run,output

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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 aggregate demand moves the economy to

Correct AnswerverifiedShow Answer

If the Federal Reserve increases the rate at which it increases the money supply,then unemployment is lower

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If the natural rate of unemployment falls,

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Phillips found a

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The sacrifice ratio is the

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Figure 35-5 Use the two graphs in the diagram to answer the following questions. -Refer to Figure 35-5.The economy would move from C to B

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Ultimately,the change in unemployment associated with a change in inflation is due to

Correct AnswerverifiedShow Answer

Any policy change that reduced the natural rate of unemployment

Correct AnswerverifiedShow Answer

The long-run response to a decrease in the money supply growth rate is shown by shifting

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Disinflation would eventually cause

Correct AnswerverifiedShow Answer

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