Question 1

In the late 1970s,proponents of rational expectations argued that

Accepted Answer

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.E) A) and C)
F) B) and C)

Question 2

In 1980,the U.S.misery index was

Accepted Answer

A)   much higher than average.
B)   slightly higher than average.
C)   about average.
D)   below average.E) A) and C)
F) None of the above

Question 3

In the long run inflation

Accepted Answer

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.E) A) and C)
F) A) and D)

Question 4

If inflation expectations rise,the short-run Phillips curve shifts

Accepted Answer

A)   left.If inflation remains the same,unemployment falls.
B)   left.If inflation remains the same,unemployment rises.
C)   right.If inflation remains the same,unemployment falls.
D)   right.If inflation remains the same,unemployment rises.E) B) and C)
F) A) and D)

Question 5

As an economist working for a U.S.government agency you determine that a particular country has a sacrifice ratio of 3.Policy-makers in that country are thinking of lowering the inflation rate from 10% to 4%.Is this sacrifice ratio higher or lower than the typical estimate? From your numbers,what is the amount of output that will be lost for this country to reduce its inflation rate?

Accepted Answer

A)   The sacrifice ratio is higher than the typical estimate.It will cost 30% of annual output to reach the new inflation target.
B)   The sacrifice ratio is higher than the typical estimate.It will cost 18% of annual output to reach the new inflation target.
C)   The sacrifice ratio is lower than the typical estimate.It will cost 30% of annual output to reach the new inflation target.
D)   The sacrifice ratio is lower than the typical estimate.It will cost 18% of annual output to reach the new inflation target.E) All of the above
F) B) and C)

Question 6

An increase in the natural rate of unemployment shifts the long-run Phillips curve to the right.

Accepted Answer

A) True 
 B)False

Exam 35: The Short-Run Trade-Off Between Inflation and Unemployment

If inflation expectations rise,the short-run Phillips curve shifts

Correct Answer
verified

An increase in the natural rate of unemployment shifts the long-run Phillips curve to the right.

Correct Answer
verified

In 1980,the U.S.misery index was

Correct Answer
verified

Correct Answer
verified

In the long run inflation

Correct Answer
verified

In the late 1970s,proponents of rational expectations argued that

Correct Answer
verified

Exam 35: The Short-Run Trade-Off Between Inflation and Unemployment

If inflation expectations rise,the short-run Phillips curve shifts

Correct AnswerverifiedShow Answer

An increase in the natural rate of unemployment shifts the long-run Phillips curve to the right.

Correct AnswerverifiedShow Answer

In 1980,the U.S.misery index was

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the long run inflation

Correct AnswerverifiedShow Answer

In the late 1970s,proponents of rational expectations argued that

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified