Question 1

Friedman argued that a central bank could use monetary policy to peg which of the following?

Accepted Answer

A)   the nominal exchange rate
B)   the real GDP growth rate
C)   the unemployment rate
D)   the interest rate

Question 2

Although monetary policy cannot reduce the natural rate of unemployment,other types of policies can.

Accepted Answer

A) True 
 B)False

Question 3

Figure 16-4 
-Refer to the Figure 16-4.Along LRPC,what is the expected rate of inflation?

Accepted Answer

A)   0 percent
B)   the actual rate of inflation
C)   3 percent
D)   the natural rate of inflation

Question 4

Proponents of rational expectations theory have argued that,in the most extreme case,if policymakers are credibly committed to reducing inflation,and if rational people understand that commitment and quickly lower their inflation expectation,the sacrifice ratio could be as small as what?

Accepted Answer

A)   0
B)   1
C)   3
D)   5

Question 5

The long-run response to a decrease in the growth rate of the money supply is shown by shifting which of the Phillips curves and in what direction?

Accepted Answer

A)   by shifting the short-run and long-run Phillips curves left
B)   by shifting the short-run and long-run Phillips curves right
C)   by shifting only the short-run Phillips curve left
D)   by shifting only the short-run Phillips curve right

Question 6

If there is a favourable supply shock,what will most likely happen?

Accepted Answer

A)   The aggregate supply curve and the short-run Phillips curve will both shift right.
B)   The aggregate supply curve and the short-run Phillips curve will both shift left.
C)   The aggregate supply curve will shift right,and the short-run Phillips curve will shift left.
D)   The aggregate supply curve will shift left,and the short-run Phillips curve will shift right.

Question 7

Suppose the natural rate of unemployment is 6 percent,the expected inflation is 2 percent,and the constant "a" in the short-run Phillips curve equation is 0.8.Change the expected inflation to 3 percent and draw the new Phillips curve.How did it change?

Accepted Answer

The 3 percent expected inflation SRPC is...

Exam 16: The Short-Run Tradeoff Between Inflation and Unemployment

Suppose the natural rate of unemployment is 6 percent,the expected inflation is 2 percent,and the constant "a" in the short-run Phillips curve equation is 0.8.Change the expected inflation to 3 percent and draw the new Phillips curve.How did it change?

Correct Answer
verified
The 3 percent expected inflation SRPC is...
View Answer

Although monetary policy cannot reduce the natural rate of unemployment,other types of policies can.

Correct Answer
verified

Friedman argued that a central bank could use monetary policy to peg which of the following?

Correct Answer
verified

Proponents of rational expectations theory have argued that,in the most extreme case,if policymakers are credibly committed to reducing inflation,and if rational people understand that commitment and quickly lower their inflation expectation,the sacrifice ratio could be as small as what?

Correct Answer
verified

If there is a favourable supply shock,what will most likely happen?

Correct Answer
verified

The long-run response to a decrease in the growth rate of the money supply is shown by shifting which of the Phillips curves and in what direction?

Correct Answer
verified

Figure 16-4 -Refer to the Figure 16-4.Along LRPC,what is the expected rate of inflation?

Correct Answer
verified

Exam 16: The Short-Run Tradeoff Between Inflation and Unemployment

Suppose the natural rate of unemployment is 6 percent,the expected inflation is 2 percent,and the constant "a" in the short-run Phillips curve equation is 0.8.Change the expected inflation to 3 percent and draw the new Phillips curve.How did it change?

Correct AnswerverifiedThe 3 percent expected inflation SRPC is...View AnswerShow Answer

Although monetary policy cannot reduce the natural rate of unemployment,other types of policies can.

Correct AnswerverifiedShow Answer

Friedman argued that a central bank could use monetary policy to peg which of the following?

Correct AnswerverifiedShow Answer

Proponents of rational expectations theory have argued that,in the most extreme case,if policymakers are credibly committed to reducing inflation,and if rational people understand that commitment and quickly lower their inflation expectation,the sacrifice ratio could be as small as what?

Correct AnswerverifiedShow Answer

If there is a favourable supply shock,what will most likely happen?

Correct AnswerverifiedShow Answer

The long-run response to a decrease in the growth rate of the money supply is shown by shifting which of the Phillips curves and in what direction?

Correct AnswerverifiedShow Answer

Figure 16-4 -Refer to the Figure 16-4.Along LRPC,what is the expected rate of inflation?

Correct AnswerverifiedShow Answer

Correct Answer
verified
The 3 percent expected inflation SRPC is...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified