Question 1

Just as the aggregate-demand curve slopes downward only in the short run, the trade-off between inflation and unemployment holds only in the long run.

Accepted Answer

A) True 
 B)False

Question 2

When aggregate demand shifts rightward along the short-run aggregate-supply curve, inflation

Accepted Answer

A)  increases and unemployment increases.
B)  increases and unemployment decreases.
C)  decreases and unemployment increases.
D)  decreases and unemployment decreases.E) None of the above
F) A) and B)

Question 3

Which of the following is vertical?

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 long-run Phillips curve, but not the long-run aggregate supply curveE) All of the above
F) B) and C)

Question 4

Suppose the Fed increased the growth rate of the money supply. Which of the following would be higher in the long run?

Accepted Answer

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

Question 5

The natural rate of unemployment is the same as the socially optimal rate of unemployment.

Accepted Answer

A) True 
 B)False

Question 6

In 1968, economist Milton Friedman published a paper criticizing the Phillips curve on the grounds that

Accepted Answer

A)  it seemed to work for wages but not for inflation.
B)  monetary policy was ineffective in combating inflation.
C)  the Phillips curve did not apply in the long run.
D)  Phillips had made errors in collecting his data.E) None of the above
F) B) and C)

Question 7

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

Question 8

Suppose the price level is 115.00 at the end of 2020, 112.02 at the end of 2021, and 109.08 at the end of 2022. Can we accurately describe the period 2021-2022 as a period of disinflation?

Accepted Answer

No. Since the price level is f...

Question 9

Figure 35-4. The left-hand graph shows a short-run aggregate-supply (SRAS)  curve and two aggregate-demand (AD)  curves. On the left-hand diagram, the price level is measured on the vertical axis; on the right-hand diagram, the inflation rate is measured on the vertical axis.  
-Refer to Figure 35-4. What is measured along the horizontal axis of the right-hand graph?

Accepted Answer

A)  the interest rate
B)  the price level
C)  the government's budget deficit as a percent of GDP
D)  the unemployment rateE) A) and D)
F) All of the above

Question 10

When aggregate demand shifts right along the short-run aggregate supply curve, unemployment

Accepted Answer

A)  falls, so there are upward pressures on wages and prices.
B)  falls, so there are downward pressures on wages and prices.
C)  rises, so there are upward pressures on wages and prices.
D)  rises, so there are downward pressures on wages and prices.E) C) and D)
F) B) and C)

Question 11

A vertical long-run Phillips curve is consistent with

Accepted Answer

A)  the conclusion of Friedman and Phelps, but it is not consistent with the classical idea of monetary neutrality.
B)  the classical idea of monetary neutrality, but it is not consistent with the conclusion of Friedman and Phelps.
C)  both the conclusion of Friedman and Phelps and the classical idea of monetary neutrality.
D)  neither the conclusion of Friedman and Phelps nor the classical idea of monetary neutrality.E) B) and C)
F) A) and D)

Question 12

If consumption expenditures fall, then in the short run

Accepted Answer

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

Question 13

Other things the same, if the central bank decreases the rate at which it increases the money supply, then

Accepted Answer

A)  unemployment and inflation rise in the short run.
B)  unemployment rises and inflation falls in the short run.
C)  unemployment falls and inflation rises in the short run.
D)  unemployment and inflation fall in the short run.E) C) and D)
F) None of the above

Question 14

During the mid and last part of the 1990's both inflation and unemployment were low. In general this could have been the result of

Accepted Answer

A)  adverse supply shocks that shifted the short-run Phillips curve left.
B)  adverse supply shocks that shifted the short-run Phillips curve right.
C)  favorable supply shocks that shifted the short-run Phillips curve left.
D)  favorable supply shocks that shifted the short-run Phillips curve right.E) All of the above
F) A) and C)

Question 15

Figure 35-3. 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 35-3. What is measured along the vertical axis of the left-hand graph?

Accepted Answer

A)  the wage rate
B)  the inflation rate
C)  the price level
D)  the change in output from one year to the nextE) All of the above
F) A) and C)

Question 16

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 17

Figure 35-9. The left-hand graph shows a short-run aggregate-supply (SRAS)  curve and two aggregate-demand (AD)  curves. On the right-hand diagram, "Inf Rate" means "Inflation Rate."  
-Refer to Figure 35-9. What is measured along the horizontal axis of the right-hand graph?

Accepted Answer

A)  time
B)  the unemployment rate
C)  real GDP
D)  the growth rate of real GDPE) A) and B)
F) None of the above

Question 18

Samuelson and Solow reasoned that when aggregate demand was low, unemployment was

Accepted Answer

A)  high, so there was upward pressure on wages and prices.
B)  high, so there was downward pressure on wages and prices.
C)  low, so there was upward pressure on wages and prices.
D)  low, so there was downward pressure on wages and prices.E) B) and D)
F) C) and D)

Question 19

Figure 35-1. 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 35-1. Assuming the price level in the previous year was 100, point F 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) A) and B)
F) B) and C)

Question 20

Figure 35-8
Use this graph to answer the questions below. 
-Refer to figure 35-8. Suppose the economy starts at 5% unemployment and 3% inflation and expected inflation remains at 3%. Which one of the following points could the economy move to in the short run if the Federal Reserve pursues a more expansionary monetary policy?

Accepted Answer

A)  7% unemployment and 1% inflation
B)  7% unemployment and 3% inflation
C)  3% unemployment and 5% inflation
D)  3% unemployment and 7% inflationE) B) and D)
F) All of the above

Exam 35: The Short-Run Tradeoff Between Inflation and Unemployment

Which of the following is downward-sloping?

Correct Answer
verified

If consumption expenditures fall, then in the short run

Correct Answer
verified

Samuelson and Solow reasoned that when aggregate demand was low, unemployment was

Correct Answer
verified

When aggregate demand shifts right along the short-run aggregate supply curve, unemployment

Correct Answer
verified

Which of the following is vertical?

Correct Answer
verified

Just as the aggregate-demand curve slopes downward only in the short run, the trade-off between inflation and unemployment holds only in the long run.

Correct Answer
verified

In 1968, economist Milton Friedman published a paper criticizing the Phillips curve on the grounds that

Correct Answer
verified

During the mid and last part of the 1990's both inflation and unemployment were low. In general this could have been the result of

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

A vertical long-run Phillips curve is consistent with

Correct Answer
verified

When aggregate demand shifts rightward along the short-run aggregate-supply curve, inflation

Correct Answer
verified

Correct Answer
verified

The natural rate of unemployment is the same as the socially optimal rate of unemployment.

Correct Answer
verified

Suppose the price level is 115.00 at the end of 2020, 112.02 at the end of 2021, and 109.08 at the end of 2022. Can we accurately describe the period 2021-2022 as a period of disinflation?

Correct Answer
verified
No. Since the price level is f...
View Answer

Other things the same, if the central bank decreases the rate at which it increases the money supply, then

Correct Answer
verified

Correct Answer
verified

Suppose the Fed increased the growth rate of the money supply. Which of the following would be higher in the long run?

Correct Answer
verified

Figure 35-9. The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves. On the right-hand diagram, "Inf Rate" means "Inflation Rate." -Refer to Figure 35-9. What is measured along the horizontal axis of the right-hand graph?

Correct Answer
verified

Exam 35: The Short-Run Tradeoff Between Inflation and Unemployment

Which of the following is downward-sloping?

Correct AnswerverifiedShow Answer

If consumption expenditures fall, then in the short run

Correct AnswerverifiedShow Answer

Samuelson and Solow reasoned that when aggregate demand was low, unemployment was

Correct AnswerverifiedShow Answer

When aggregate demand shifts right along the short-run aggregate supply curve, unemployment

Correct AnswerverifiedShow Answer

Which of the following is vertical?

Correct AnswerverifiedShow Answer

Just as the aggregate-demand curve slopes downward only in the short run, the trade-off between inflation and unemployment holds only in the long run.

Correct AnswerverifiedShow Answer

In 1968, economist Milton Friedman published a paper criticizing the Phillips curve on the grounds that

Correct AnswerverifiedShow Answer

During the mid and last part of the 1990's both inflation and unemployment were low. In general this could have been the result of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A vertical long-run Phillips curve is consistent with

Correct AnswerverifiedShow Answer

When aggregate demand shifts rightward along the short-run aggregate-supply curve, inflation

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The natural rate of unemployment is the same as the socially optimal rate of unemployment.

Correct AnswerverifiedShow Answer

Suppose the price level is 115.00 at the end of 2020, 112.02 at the end of 2021, and 109.08 at the end of 2022. Can we accurately describe the period 2021-2022 as a period of disinflation?

Correct AnswerverifiedNo. Since the price level is f...View AnswerShow Answer

Other things the same, if the central bank decreases the rate at which it increases the money supply, then

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose the Fed increased the growth rate of the money supply. Which of the following would be higher in the long run?

Correct AnswerverifiedShow Answer

Figure 35-9. The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves. On the right-hand diagram, "Inf Rate" means "Inflation Rate." -Refer to Figure 35-9. What is measured along the horizontal axis of the right-hand graph?

Correct AnswerverifiedShow Answer

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No. Since the price level is f...
View Answer

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