Deck 35: 0:sec 350 Mc the Short Run Trade Off Between Inflation and Unemployment

Question 1

In the long run,inflation

A)and unemployment are primarily determined by labor market factors.
B)and unemployment are primarily determined by the rate of money supply growth.
C)is primarily determined by the rate of money supply growth while unemployment is primarily determined by labor market factors.
D)is primarily determined by labor market factors while unemployment is primarily determined by the rate of money supply growth.

Answer 1

C

Question 2

One determinant of the long-run average unemployment rate is the

A)market power of unions,while the inflation rate depends primarily upon government spending.
B)minimum wage,while the inflation rate depends primarily upon the money supply growth rate.
C)rate of growth of the money supply,while the inflation rate depends primarily upon the market power of unions.
D)existence of efficiency wages,while the inflation rate depends primarily upon the extent to which firms are competitive.

Answer 2

A

Question 3

The misery index is supposed to measure the

A)social cost of unemployment.
B)health of the economy.
C)lost output associated with a particular unemployment rate.
D)short-run tradeoff between inflation and unemployment.

Answer 3

C

Question 4

When monetary and fiscal policymakers expand aggregate demand,which of the following costs is incurred in the short run?

A)Short-run aggregate supply decreases.
B)The natural rate of unemployment increases.
C)The price level increases more rapidly.
D)The money supply increases less rapidly.

Question 5

In the long run,

A)the natural rate of unemployment depends primarily on the level of aggregate demand.
B)inflation depends primarily upon the money supply growth rate.
C)there is a tradeoff between the inflation rate and the natural rate of unemployment.
D)All of the above are correct.

Question 6

Which of the following statements is correct?

A)In the short run,unemployment and inflation are positively related.In the long run they are largely unrelated problems.
B)Inflation and unemployment are positively related in the short run and in the long run.
C)In the short run,unemployment and inflation are negatively related.In the long run they are largely unrelated problems.
D)Inflation and unemployment are negatively related in the short run and in the long run.

Question 7

Closely watched indicators such as the inflation rate and unemployment are released each month by the

A)Bureau of the Budget.
B)Bureau of Labor Statistics.
C)Department of the Treasury.
D)President's Council of Economic Advisors.

Question 8

Suppose policymakers take actions that cause a contraction of aggregate demand.Which of the following is a short-run consequence of this contraction?

A)The inflation rate decreases.
B)The level of output decreases.
C)The unemployment rate increases.
D)All of the above are correct.

Question 9

In the long run,

A)the natural rate of unemployment depends primarily on the level of aggregate demand.
B)inflation depends primarily upon the money supply growth rate.
C)there is a tradeoff between the inflation rate and the natural rate of unemployment.
D)All of the above are correct.

Question 10

One determinant of the natural rate of unemployment is the

A)rate of growth of the money supply.
B)minimum wage rate.
C)expected inflation rate.
D)All of the above are correct.

Question 11

The misery index is calculated as the

A)inflation rate plus the unemployment rate.
B)unemployment rate minus the inflation rate.
C)actual inflation rate minus the expected inflation rate.
D)natural unemployment rate times the inflation rate