1. In the short run, a. unemployment and inflation are positively related. In th
ID: 1100228 • Letter: 1
Question
1. In the short run,
a.
unemployment and inflation are positively related. In the long run they are largely unrelated problems.
b.
and in the long run inflation and unemployment are positively related.
c.
unemployment and inflation are negatively related. In the long run they are largely unrelated problems.
d.
and in the long run inflation and unemployment are negatively related.
____ 2. According to the Phillips curve, policymakers could reduce both inflation and unemployment by
a.
increasing the money supply.
b.
increasing government expenditures.
c.
raising taxes.
d.
None of the above is correct.
____ 3. The large increase in oil prices in the 1970s was caused primarily by a(n)
a.
increase in demand for oil.
b.
decrease in demand for oil.
c.
decrease in the supply of oil.
d.
increase in the supply of oil.
____ 4. In the late 1970s, proponents of rational expectations argued that
a.
the Fed should not attempt to aggressively fight inflation.
b.
the sacrifice ratio was smaller than previously thought.
c.
the short run was relatively long.
d.
None of the above is correct.
____ 5. Suppose that the money supply decreases. In the short run, this increases prices according to
a.
both the short-run Phillips curve and the aggregate demand and aggregate supply model.
b.
neither the short-run Phillips curve nor the aggregate demand and aggregate supply model.
c.
the short-run Phillips curve, but not the aggregate demand and aggregate supply model.
d.
the aggregate demand and aggregate supply model but not the short-run Phillips curve.
____ 6. If the short-run Phillips curve were stable, which of the following would be unusual?
a.
an increase in government spending and a fall in unemployment
b.
an increase in inflation and a decrease in output
c.
a decrease in the inflation rate and a rise in the unemployment rate
d.
a decrease in the money supply and a rise in the unemployment rate.
____ 7. More flexible labor markets will shift
a.
both the long-run Phillips curve and the long-run aggregate supply curve to the right.
b.
both the long-run Phillips curve and the long-run aggregate supply curve to the left.
c.
the long-run Phillips curve to the right and the long-run aggregate supply curve to the left.
d.
the long-run Phillips curve to the left and the long-run aggregate supply curve to the right.
Figure 35-6
Use the two graphs in the diagram to answer the following questions.
____ 8. Refer to Figure 35-6. Starting from C and 3, in the short run an unexpected increase in money supply growth moves the economy to
a.
A and 1.
b.
B and 2.
c.
back to C and 3.
d.
D and 4.
____ 9. If the natural rate of unemployment falls,
a.
both the short-run Phillips curve and the long-run Phillips curve shift.
b.
only the short-run Phillips curve shifts.
c.
only the long-run Phillips curve shifts.
d.
neither the short-run nor the long-run Phillips curves shift.
____ 10. If people believe that the central bank is going to reduce inflation
a.
the short-run Phillips curve shifts right and the sacrifice ratio will rise.
b.
the short-run Phillips curve shifts right and the sacrifice ratio will fall.
c.
the short-run Phillips curve shifts left and the sacrifice ratio will rise.
d.
the short-run Phillips curve shifts left and the sacrifice ratio will fall.
a.
unemployment and inflation are positively related. In the long run they are largely unrelated problems.
b.
and in the long run inflation and unemployment are positively related.
c.
unemployment and inflation are negatively related. In the long run they are largely unrelated problems.
d.
and in the long run inflation and unemployment are negatively related.
Explanation / Answer
C
B
A
A
C
C
D
C
A
B
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