[Solved] If the Economy Is Producing at Potential GDP

A decrease in expected inflation will A)reduce real wages. B)increase the natural rate of unemployment. C)shift the long-run Phillips curve to the left. D)shift the short-run Phillips curve to the left. E)increase nominal wages.

Which of the following would increase the natural rate of unemployment? A)an increase in the number of younger, less skilled workers in the economy B)a reduction in the generosity of unemployment insurance programs C)restrictions on the ability of unions to negotiate wage changes with companies D)an increase in government-sponsored programs that train unemployed workers so they can find new jobs quickly E)an increase in the number firms going out of business due to a recession

What can the Bank of Canada do to reduce the natural rate of unemployment? A)nothing B)enter into purchase and resale agreements C)enter into sale and repurchase agreements D)reduce the policy rate target E)raise the required reserve ratio

What is the NAIRU? A)the natural accelerating inflation rate of unemployment B)the nonaccelerating inflation rate of unemployment C)the nongovernmental agency of inflationary rate unions D)the new accrual index of real unemployment E)the normal aggregate investment rate of unilateral investment

The long-run aggregate supply curve is ________, while the long-run Phillips curve is ________. A)positively sloped; negatively sloped B)vertical; negatively sloped C)vertical; also vertical D)positively sloped; also positively sloped E)vertical; horizontal

The long-run Phillips curve is ________ than the short-run Phillips curve. A)flatter B)steeper C)less stable D)more volatile E)more curved

What impact does monetary policy have on the long-run Phillips curve? A)Monetary policy can only shift the long-run Phillips curve to the left. B)Monetary policy shifts the long-run Phillips curve to the right or left, depending on whether monetary policy is expansionary or contractionary. C)Monetary policy can only shift the long-run Phillips curve to the right. D)Monetary policy has no impact on the long-run Phillips curve. E)Active monetary policy will make the long-run Phillips curve flatter.

When unemployment is below its natural rate, the inflation rate will eventually A)increase. B)decrease. C)move to its natural rate. D)become equal to the natural rate of unemployment. E)fall to meet expected inflation.

If the Bank of Canada attempts to continue reducing unemployment by manipulating monetary policy, which of the following would you expect to see? A)The Bank of Canada will follow deflationary monetary policies. B)The Bank of Canada will follow inflationary monetary policies. C)The rate of inflation will fall as the Bank of Canada tries to reduce the unemployment rate. D)The Bank of Canada will reduce the natural rate of unemployment. E)The Bank of Canada will have to target inflation rates.

Growth in aggregate demand will A)cause deflation. B)increase unemployment. C)move the economy to a higher point on the short-run Phillips curve. D)cause the short-run Phillips curve to shift to the left. E)cause the short-run Phillips curve to become flatter.