Question 1

If expected inflation decreases does the short-run Phillips curve shift? If so,what direction does it shift? Does the long-run Phillips curve shift? If so,what direction does it shift?

Accepted Answer

If expected inflation decreases the short-run Phillips curve shifts left. The long run Phillips curve does not shift.

Question 2

According to the Phillips curve,which fiscal policies can be used to reduce unemployment in the short run?

Accepted Answer

An increase in government expenditures or a decrease in taxes.

Question 3

U.S.net exports fall due to recessions in foreign countries.
A.According to the aggregate demand and supply model,what happens to the price level and output in the short run?
B.According to the short-run Phillips curve what happens to inflation and unemployment in the short run?
C.If the Fed wanted to reverse the effects of this shock on output,what should it do?

Accepted Answer

A. The price level and output both fall.
B. The inflation rate falls and unemployment rises.
C. Increase the growth rate of the money supply.

Question 4

Suppose,as in the 1970's in the U.S. ,that demographic groups which typically have higher unemployment rates become a larger percentage of the labor force.Would this have any effect on the long-run Phillips curve?

Accepted Answer

The answer of Suppose,as in the 1970's in the U.S....

Question 5

If the Fed raised the money supply growth by more than expected then the unemployment rate would ----- in the short run.Explain the process by which the economy moves to the long run if the Fed maintains the higher money supply growth rate.

Accepted Answer

The answer of If the Fed raised the money supply...

Question 6

For a given short-run Phillips curve,if expected inflation is 10% but actual inflation is 8%,is the unemployment rate above or below its natural rate?

Accepted Answer

The answer of For a given short-run Phillips curve,if expected...

Question 7

The Fed increases the money supply growth rate.Assuming inflation expectations remain constant,use a Phillips curve diagram to show the short-run effects of the Fed's policy.

Accepted Answer

The answer of The Fed increases the money supply growth...

Question 8

What does an unexpected decrease in the growth rate of the money supply do to inflation and unemployment in the short-run? What does it do to inflation and unemployment in the long run?

Accepted Answer

The answer of What does an unexpected decrease in the...

Question 9

Suppose that businesses become less optimistic about the future.Assuming no change in inflation expectations,how would the effects of this shock be shown on the Phillips curve diagram and what would happen to inflation and unemployment?

Accepted Answer

The answer of Suppose that businesses become less optimistic about...

Question 10

What is meant by the natural rate of unemployment?

Accepted Answer

The answer of What is meant by the natural rate...

Question 11

If consumer confidence rises and inflation expectations remain unchanged,what happens to inflation and unemployment? Defend your answer.

Accepted Answer

The answer of If consumer confidence rises and inflation expectations...

Question 12

According to the long-run Phillips curve,if the Fed increases the growth rate of the money supply,what happens to the inflation rate and the unemployment rate in the long run?

Accepted Answer

The answer of According to the long-run Phillips curve,if the...

Question 13

Government expenditures increase.What happens to the price level and output? Explain how the change in the price level and output effect the inflation rate and the unemployment rate.

Accepted Answer

The answer of Government expenditures increase.What happens to the price...

Question 14

If asset prices fall and inflation expectations remain unchanged,what happens to inflation and unemployment? Defend your answer.

Accepted Answer

The answer of If asset prices fall and inflation expectations...

Question 15

List one specific policy that would shift the long-run Phillips curve to the right.

Accepted Answer

The answer of List one specific policy that would shift...

Question 16

What does the natural-rate hypothesis claim?

Accepted Answer

The answer of What does the natural-rate hypothesis claim?...

Question 17

For a given short-run Phillips curve,if expected inflation is 8% but actual inflation is 10%,is the unemployment rate above or below its natural rate?

Accepted Answer

The answer of For a given short-run Phillips curve,if expected...

Question 18

If expected inflation rises but actual inflation remains the same,what happens to the unemployment rate? Defend your answer.

Accepted Answer

The answer of If expected inflation rises but actual inflation...

Question 19

An increase in the natural rate of unemployment shifts the short-run Phillips curve to the -----.If the central bank sees the increase in the unemployment rate,but thinks the natural rate has remained the same and so wants to reduce unemployment,it would -------- the money supply growth rate.If it maintains this money supply growth rate,eventually the short run Phillips curve will shift ----- and unemployment will be -----.

Accepted Answer

The answer of An increase in the natural rate of...

Question 20

As the aggregate demand curve shifts to the right,what happens to the price level and output? What do these changes imply happens to the inflation rate and the unemployment rate?

Accepted Answer

The answer of As the aggregate demand curve shifts to...

Quiz 22: The Short Run Trade Off Between Inflation and Unemployment: Part A

If expected inflation decreases does the short-run Phillips curve shift? If so,what direction does it shift? Does the long-run Phillips curve shift? If so,what direction does it shift?

According to the Phillips curve,which fiscal policies can be used to reduce unemployment in the short run?

Suppose,as in the 1970's in the U.S. ,that demographic groups which typically have higher unemployment rates become a larger percentage of the labor force.Would this have any effect on the long-run Phillips curve?

If the Fed raised the money supply growth by more than expected then the unemployment rate would ----- in the short run.Explain the process by which the economy moves to the long run if the Fed maintains the higher money supply growth rate.

For a given short-run Phillips curve,if expected inflation is 10% but actual inflation is 8%,is the unemployment rate above or below its natural rate?

The Fed increases the money supply growth rate.Assuming inflation expectations remain constant,use a Phillips curve diagram to show the short-run effects of the Fed's policy.

What does an unexpected decrease in the growth rate of the money supply do to inflation and unemployment in the short-run? What does it do to inflation and unemployment in the long run?

Suppose that businesses become less optimistic about the future.Assuming no change in inflation expectations,how would the effects of this shock be shown on the Phillips curve diagram and what would happen to inflation and unemployment?

What is meant by the natural rate of unemployment?

If consumer confidence rises and inflation expectations remain unchanged,what happens to inflation and unemployment? Defend your answer.

According to the long-run Phillips curve,if the Fed increases the growth rate of the money supply,what happens to the inflation rate and the unemployment rate in the long run?

Government expenditures increase.What happens to the price level and output? Explain how the change in the price level and output effect the inflation rate and the unemployment rate.

If asset prices fall and inflation expectations remain unchanged,what happens to inflation and unemployment? Defend your answer.

List one specific policy that would shift the long-run Phillips curve to the right.

What does the natural-rate hypothesis claim?

For a given short-run Phillips curve,if expected inflation is 8% but actual inflation is 10%,is the unemployment rate above or below its natural rate?

If expected inflation rises but actual inflation remains the same,what happens to the unemployment rate? Defend your answer.

As the aggregate demand curve shifts to the right,what happens to the price level and output? What do these changes imply happens to the inflation rate and the unemployment rate?