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.