Econ Reading Quiz 17

According to Milton​ Friedman, differences between the actual and expected inflation rates could lead the actual unemployment rate to A. fall below the natural​ rate, but not rise above it. B. rise above or fall below the natural rate. C. rise above the natural​ rate, but not fall below it. D. remain equal to the natural rate for a long time

B.

If the unemployment rate is below the natural​ rate, the inflation rate tends to​ ___________, and​ eventually, the​ short-run Phillips curve will shift​ _______. A. ​decrease; up B. ​increase; down C. ​decrease; down D. ​increase; up

D.

There is a different​ short-run Phillips curve for every level of the​ ___________ inflation rate. The inflation rate at which the​ short-run Phillips curve intersects the​ long-run Phillips curve equals the​ ___________ inflation rate. A. ​actual; actual B. ​expected; actual C. ​actual; expected D. ​expected; expected

D.

Which of the following statements is ​correct? A. In the long​ run, a higher or lower inflation rate has no effect on the unemployment rate. B. In the long​ run, a higher or lower price level has no effect on real GDP. C. In the long​ run, the Phillips curve is a vertical line at the natural rate of unemployment. D. All of the above.

D.

​Cross-country evidence supports that the more independent a​ country's central​ bank, A. the higher its national debt. B. the lower its national debt. C. the higher its inflation rate. D. the lower its inflation rate.

D.

A significant reduction in the inflation rate is called A. disinflation. B. ​cost-push inflation. C. hyperinflation. D. stagflation.

A.

After Fed Chairman Paul Volcker began fighting inflation in​ 1979, workers and firms eventually​ ____________ their expectations of future​ inflation, and the​ short-run Phillips curve shifted​ ___________. A. ​lowered; down B. ​lowered; up C. ​raised; up D. ​raised; down

A.

How can the Fed fight a combination of rising unemployment and rising​ inflation? A. Not​ easily; neither expansionary nor contractionary monetary policy can solve both problems simultaneously. B. By applying expansionary monetary​ policy, the Fed can solve both problems simultaneously. C. By resorting to fiscal policy instead of monetary policy the Fed can solve both problems simultaneously. D. By applying contractionary monetary​ policy, the Fed can solve both problems simultaneously.

A.

If expected inflation is higher than actual​ inflation, actual real wages in the economy will turn out to be​ _________ than expected real​ wages; consequently, firms will hire​ _________ workers than they had planned. A. ​higher; fewer B. ​lower; fewer C. ​lower; more D. ​higher; more

A.

The concept of a nonaccelerating inflation rate of unemployment​ (NAIRU) helps us to understand why in the long​ run, the Federal Reserve A. cannot affect either the inflation rate or the unemployment rate. B. can affect both the inflation rate and the unemployment rate. C. can affect the inflation rate but not the unemployment rate. D. can affect the unemployment rate but not the inflation rate.

C.

A negative supply​ shock, such as the OPEC oil price increases of the early​ 1970s, can be illustrated by a shift to the​ ______________ of the​ short-run aggregate supply curve and a shift​ _________________ of the​ short-run Phillips curve. A. ​right; up B. ​right; down C. ​left; up D. ​left; down

C.

If workers ignore inflation in forming their expectations of the real wage​ rate, what is the effect of an expansionary monetary​ policy? A. A move down along the​ short-run Phillips curve. B. A move down along the​ long-run Phillips curve. C. A move up along the​ short-run Phillips curve. D. A move up along the​ long-run Phillips curve.

C.