Question 1

If aggregate demand increases and expectations regarding inflation remain constant, what impact if any does this have on the short-run Phillips curve?

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Question 2

During the 1960s, the Phillips curve relationship was relatively stable. During the 1970s, the Phillips curve relationship was unstable. Based on your understanding of the aggregate supply and aggregate demand model, explain why this was so.

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Question 3

Explain what the Phillips curve represents.

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Question 4

Explain what the Phillips Curve shows.

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Question 5

Explain what role import prices play in determining the Phillips curve.

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Question 6

Show with the use of a graph why minimum wage laws can cause unemployment.

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Question 7

What sequence of events results from a decrease in aggregate demand? Explain the impact on the price level, inventories, output and employment.

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Question 8

-Use the above graph to answer the following question. Suppose the economy is at Point A, what will be the effect in the short run of an increase in money supply? Where will this move the economy?

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-Use the above graph to answer the...

Question 9

What would the Phillips curve look like if every year there was a regular shift in the aggregate supply curve to the left but with no corresponding change in the aggregate demand curve, that is, aggregate demand remained constant.

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Question 10

-Use the above graph to answer the following question. Suppose the economy is at Point C, what could possibly move the economy to Point D?

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-Use the above graph to answer the...

Question 11

What is the short-run relationship between the unemployment rate and the price level?

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Question 12

Suppose that empirical evidence demonstrated that at a 10% inflation rate the unemployment rate was 4% and that every 2% decline in the inflation rate translated into a 1% increase in the unemployment rate. Draw a graph showing this relationship. Place the inflation rate on the vertical axis.

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Question 13

What sequence of events results from an increase in aggregate demand? Explain the impact on the price level, inventories, output and employment.

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Question 14

What is the short-run relationship between the unemployment rate and output?

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Question 15

If the AS curve shifts from year to year, but the AD curve does not, then what kind of relationship would we expect between inflation and unemployment?

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Question 16

Explain how the minimum wage laws account for a percentage of unemployment.

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Question 17

-Using the above graph, how does an unemployment rate of U₁ compare to the natural rate of unemployment?

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-Using the above graph, how does an...

Question 18

Draw a graph of the Phillips Curve.

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Question 19

Explain what role expectations play in determining the Phillips curve.

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Question 20

If the economy experiences both inflation and unemployment when aggregate supply decreased, then what must have happened to aggregate demand?

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Quiz 14: The Labor Market in the Macroeconomy