Question 1

By raising aggregate demand more than anticipated,policymakers

Accepted Answer

A)  reduce unemployment for awhile.
B)  raise unemployment for awhile.
C)  reduce unemployment permanently.
D)  None of the above is correct.E) A) and C)
F) C) and D)

Question 2

France has a higher natural rate of unemployment than the United States.This suggests that

Accepted Answer

A)  France is at a higher point on its long-run Phillips curve and so has higher inflation than the United States.
B)  France is at a lower point on its long-run Phillips curve and so has lower inflation than the United States.
C)  France's Phillips curve is to the left of that of the United States,possibly because they have higher inflation.
D)  France's Phillips curve is to the right of that of the United States,possibly because they have more generous unemployment compensation.E) A) and C)
F) A) and B)

Question 3

Friedman argued that the Fed could use monetary policy to peg

Accepted Answer

A)  the level of real GDP.
B)  the growth rate of real GDP.
C)  the rate of unemployment.
D)  None of the above is correct.E) A) and B)
F) B) and C)

Question 4

A movement to the left along a given short-run Phillips curve could be caused by

Accepted Answer

A)  a reduction in the natural rate of unemployment or expansionary monetary policy.
B)  expansionary monetary policy,but not a reduction in the natural rate of unemployment.
C)  either a reduction in the natural rate of unemployment or a contractionary monetary policy.
D)  contractionary monetary policy,but not a reduction in the natural rate of unemployment.E) A) and B)
F) B) and C)

Question 5

Data for the United States traced out an almost perfect Phillips curve for much of the

Accepted Answer

A)  1960s.
B)  1970s.
C)  1980s.
D)  1990s.E) B) and C)
F) A) and B)

Question 6

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

Question 7

If inflation expectations rise,the short-run Phillips curve shifts

Accepted Answer

A)  right,so that at any unemployment rate inflation is higher in the short run than before.
B)  left,so that at any unemployment rate inflation is higher in the short run the before.
C)  right,so that at any unemployment rate inflation is lower in the short run than before.
D)  left,so that at any unemployment rate inflation is lower in the short run than before.E) None of the above
F) All of the above

Question 8

If the long-run Phillips curve shifts to the right,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) B) and D)
F) A) and C)

Question 9

A movement to the right along a given short-run Phillips curve could be caused by

Accepted Answer

A)  an increase in the natural rate of unemployment or expansionary monetary policy.
B)  expansionary monetary policy,but not an increase in the natural rate of unemployment.
C)  an increase in the natural rate of unemployment or a contractionary monetary policy.
D)  contractionary monetary policy,but not an increase in the natural rate of unemployment.E) A) and D)
F) B) and D)

Question 10

If inflation is less than expected,then the unemployment rate is

Accepted Answer

A)  greater than the natural rate.In the long run the short-run Phillips curve will shift right.
B)  greater than the natural rate.In the long run the short-run Phillips curve will shift left.
C)  less than the natural rate.In the long run the short-run Phillips curve will shift right.
D)  less than the natural rate.In the long run the short-run Phillips curve will shift left.E) B) and C)
F) A) and D)

Question 11

If the Federal Reserve increases the growth rate of the money supply,in the long run

Accepted Answer

A)  inflation is higher and the unemployment rate is lower.
B)  inflation is higher while the unemployment rate is unchanged.
C)  inflation is unchanged while the unemployment rate is lower.
D)  None of the above is correct.E) None of the above
F) A) and D)

Question 12

If efficiency wages became more common,

Accepted Answer

A)  both the long-run Phillips curve and the long-run aggregate supply curve would shift right.
B)  both the long-run Phillips curve and the long-run aggregate supply curve would shift left.
C)  the long-run Phillips curve would shift right,and the long-run aggregate supply curve would shift left.
D)  the long-run Phillips curve would shift left,and the long-run aggregate supply curve would shift right.E) A) and D)
F) A) and C)

Question 13

Figure 35-6
Use the graph below to answer the following questions. 
-Refer to Figure 35-6.If the economy starts at C and the money supply growth rate increases,then in the short run the economy moves to

Accepted Answer

A)  B.
B)  D.
C)  F.
D)  None of the above is consistent with an increase in the money supply growth rate.E) All of the above
F) None of the above

Question 14

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

Question 15

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 B)

Question 16

According to Friedman and Phelps,the unemployment rate is above the natural rate when actual inflation

Accepted Answer

A)  is greater than expected inflation.
B)  is less than expected inflation.
C)  equals expected inflation.
D)  low whether its greater than or less than expected.E) A) and C)
F) C) and D)

Question 17

Friedman argued that the Fed could use monetary policy to peg

Accepted Answer

A)  nominal exchange rates.
B)  the level of real GDP.
C)  the rate of unemployment.
D)  None of the above is correct.E) A) and B)
F) C) and D)

Question 18

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

Accepted Answer

A)  shifts the short-run Phillips curve left so inflation returns to its original rate.
B)  shifts the short-run Phillips curve left so unemployment returns to its natural rate.
C)  Both A and B are correct.
D)  None of the above is correct.E) All of the above
F) A) and B)

Question 19

One way to express the classical idea of monetary neutrality is to draw

Accepted Answer

A)  a downward-sloping short-run Phillips curve.
B)  an upward-sloping short-run Phillips curve.
C)  a downward-sloping long-run Phillips curve.
D)  a vertical long-run Phillips curve.E) A) and B)
F) B) and C)

Question 20

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

Accepted Answer

A)  raises expected inflation so the short-run Phillips curve shifts right.
B)  raises expected inflation so the short-run Phillips curve shifts left.
C)  reduces expected inflation so the short-run Phillips curve shifts left.
D)  None of the above is correct.E) A) and C)
F) A) and B)

Exam 22: The Short Run Trade Off Between Inflation and Unemployment: Shifts in the Phillips Curve the Role of Expectations

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

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If inflation is less than expected,then the unemployment rate is

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Friedman argued that the Fed could use monetary policy to peg

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If inflation expectations rise,the short-run Phillips curve shifts

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By raising aggregate demand more than anticipated,policymakers

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Figure 35-6 Use the graph below to answer the following questions. -Refer to Figure 35-6.If the economy starts at C and the money supply growth rate increases,then in the short run the economy moves to

Correct AnswerverifiedShow Answer

If efficiency wages became more common,

Correct AnswerverifiedShow Answer

France has a higher natural rate of unemployment than the United States.This suggests that

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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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One way to express the classical idea of monetary neutrality is to draw

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Friedman argued that the Fed could use monetary policy to peg

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If the Federal Reserve increases the growth rate of the money supply,in the long run

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the natural rate of unemployment falls,

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

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A movement to the right along a given short-run Phillips curve could be caused by

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According to Friedman and Phelps,the unemployment rate is above the natural rate when actual inflation

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Data for the United States traced out an almost perfect Phillips curve for much of the

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A movement to the left along a given short-run Phillips curve could be caused by

Correct AnswerverifiedShow Answer

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