[Solved] Monetary Policy Has ________ Impact on the Long-Run Phillips Curve

An increase in expected inflation will A)increase real wages. B)decrease the natural rate of unemployment. C)shift the long-run Phillips curve to the right. D)cause the short-run Phillips curve to become vertical. E)None of the above is correct.

Figure 13.4 Alt text for Figure 13.4: In figure 13.4, a graph shows the shift in the short-run Phillips curve. Long description for Figure 13.4: The x-axis is labelled, unemployment rate percent.The y-axis is labelled, inflation rate percent per year.A straight line labelled, short-run Philips Curve 1, begins at the top left corner and slopes down to the end of the x-axis.A straight line labelled, short-run Philips Curve 2, follows the same slope as curve 1, but is plotted to the right.The area between Curve 1 and Curve 2 is indicated by a right pointing arrow.A straight line labelled, long-run Philips Curve 1 is perpendicular to the x-axis, and begins from the x-axis value 5.0%.Long-run Philips Curve 1 intersects the short-run Philips Curve 1 at point (5.0%, 4.0)and intersects the short-run Philips Curve 2 at point (5.0%, 5.5%).Point (6.2, 4.0)is plotted toward the right end of the short-run Philips Curve 2.The points are connected to their respective coordinates on the x-axis and y-axis with dotted lines. -Refer to Figure 13.4.Consider the shift in the short-run Phillips curve shown in the above graph. This shift may be explained by A)an increase in the natural rate of unemployment from 5.0 to 6.2 percent. B)an increase in the expected rate of inflation from 4.0 to 5.5 percent. C)either an increase in the natural rate of unemployment from 5.0 to 6.2 percent or an increase in the expected rate of inflation from 4.0 to 5.5 percent. D)a decrease in the natural rate of unemployment. E)none of the above.

Which of the following would decrease the natural rate of unemployment? A)a decrease in the number of younger, less skilled workers in the economy B)an increase in the generosity of employment insurance programs C)fewer restrictions on unions to negotiate wage changes with companies D)a decrease in government-sponsored programs that train unemployed workers so they can find new jobs quickly E)a sudden drop in net exports which causes many firms to fail

Figure 13.5 Alt text for Figure 13.5: In figure 13.5, a graph shows the short-run and long-run Phillips curves. Long description for Figure 13.5: The x-axis is labelled, unemployment rate percent.The y-axis is labelled, inflation rate percent per year.A straight line labelled, short-run Philips Curve, begins at the top left corner and slopes down to the end of the x-axis.A straight line labelled, long-run Philips Curve is perpendicular to the x-axis, and begins from the x-axis value 5.5%.Long-run Philips Curve intersects the short-run Philips Curve at point (5.5%, 10%).A point (7.5, 5)is plotted near the right end of the short-run Philips Curve.The points are connected to their respective coordinates on the x and y-axes with dotted lines. -Refer to Figure 13.5.Consider the Phillips curves shown in the above graph.We can conclude from this graph that A)the natural rate of unemployment in this economy is 5.5 percent. B)the expected rate of inflation in this economy is 10 percent. C)ceteris paribus, a fall in the rate of inflation to 5 percent will increase unemployment to 7.5 percent in the short run. D)All of the above are correct.

A decrease in aggregate demand will A)cause inflation. B)decrease unemployment. C)move the economy to a lower point on the short-run Phillips curve. D)cause the short-run Phillips curve to shift to the right. E)cause the long-run Phillips curve to shift to the right.

In the short run, the Bank of Canada can affect which of the following? A)the inflation rate B)the unemployment rate C)the growth rate of real GDP in the economy D)the nominal interest rate E)all of the above

The ________ curves are both vertical. A)aggregate demand and short-run Phillips B)long-run aggregate supply and short-run Phillips C)long-run aggregate supply and long-run Phillips D)short-run aggregate supply and short-run Phillips E)money demand and short-run aggregate supply

If the economy is producing ________, unemployment is at its natural rate. A)at potential GDP B)above potential GDP C)at an inflation rate of zero D)at an unemployment rate of zero E)additional output each period

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

When unemployment is above 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)accelerate toward hyperinflation.