ECON 2105 Ch. 12 HW

If the natural unemployment rate increases and the expected inflation rate remains​ constant, then​ ______. A. the​ long-run Phillips curve shifts rightward and the​ short-run Phillips curve shifts rightward B. the​ long-run Phillips curve shifts rightward and the​ short-run Phillips curve does not shift C. neither the​ long-run Phillips curve nor the​ short-run Phillips curve shifts D. the​ short-run Phillips curve shifts rightward and the​ long-run Phillips curve does not shift

A. the​ long-run Phillips curve shifts rightward and the​ short-run Phillips curve shifts rightward

If the expected inflation rate increases and the natural rate of unemployment remains​ constant, then​ _______. A. the​ short-run Phillips curve shifts upward and the​ long-run Phillips curve does not shift B. the​ long-run Phillips curve shifts rightward and the​ short-run Phillips curve does not shift C. the​ long-run Phillips curve shifts rightward and the​ short-run Phillips curve shifts rightward D. neither the​ long-run Phillips curve nor the​ short-run Phillips curve shifts

A. the​ short-run Phillips curve shifts upward and the​ long-run Phillips curve does not shift

Choose the statement about the​ long-run Phillips curve that is incorrect. A. It tells us that any expected inflation rate is possible at the natural unemployment rate. B. An unexpected increase in aggregate demand shifts the​ long-run Phillips curve rightward. C. It is vertical at the natural unemployment rate. D. It shows the relationship between inflation and unemployment when the actual inflation rate equals the expected inflation rate.

B. An unexpected increase in aggregate demand shifts the​ long-run Phillips curve rightward.

Deflation occurs when​ _______. A. the quantity of money remains constant B. aggregate demand increases at a persistently slower rate than aggregate supply C. aggregate demand increases at a persistently faster rate than aggregate supply D. the growth rate of potential GDP slows

B. aggregate demand increases at a persistently slower rate than aggregate supply

f the government increases its expenditure on goods and services and as a​ result, the money wage rate​ increases, the economy has experienced​ _______. A. ​demand-pull inflation B. a​ demand-pull rise in the price level C. ​demand-push inflation D. ​cost-push inflation

B. a​ demand-pull rise in the price level

A rise in the price of oil creates​ _______. A. a recession that can be eliminated only by a decrease in potential GDP B. a​ one-time cost-push rise in the price level C. a​ one-time demand-pull rise in the price level D. a persistent increase in the price level

B. a​ one-time cost-push rise in the price level

An economy is at potential GDP when it experiences an increase in costs. The economy experiences​ _______. A. a rise in the price level and an increase in real GDP B. stagflation Your answer is correct.C. a fall in the price level and a decrease in real GDP D. a rise in the price level and a decrease in potential GDP

B. stagflation

Along the​ short-run Phillips​ curve, ______. A. the expected inflation rate and the natural unemployment rate vary B. the expected inflation rate and the natural unemployment rate are constant C. the expected inflation rate is constant and the natural unemployment rate varies D. the expected inflation rate varies and the natural unemployment rate is constant

B. the expected inflation rate and the natural unemployment rate are constant

Choose the statement that is incorrect. A. In a​ deflation, the price level persistently falls. B. A​ one-time fall in the price level occurs either because aggregate demand decreases or because​ short-run aggregate supply increases. C. In a​ deflation, the inflation rate is positive but decreasing in consequent years. D. A​ one-time fall in the price level occurs when there is an increase in capital that increases potential GDP.

C. In a​ deflation, the inflation rate is positive but decreasing in consequent years.

The consequences of deflation include all of the following except​ _______. A. redistribution of income and wealth B. employers hire fewer workers C. falling real wage rates for workers with​ long-term wage contracts D. a decrease in real GDP and employment

C. falling real wage rates for workers with​ long-term wage contracts

If inflation is​ expected, _______. A. a​ demand-pull inflation occurs B. either a​ cost-push inflation or a​ demand-pull inflation occurs C. neither a​ cost-push inflation nor a​ demand-pull inflation occur D. a​ cost-push inflation occurs

C. neither a​ cost-push inflation nor a​ demand-pull inflation occur

An economy at a​ full-employment equilibrium experiences an increase in aggregate demand. The unemployment rate​ ______ its natural​ rate, and to return to the​ long-run equilibrium, the money wage rate begins to​ ______. A. rises​ above; fall B. falls​ below; rise C. rises​ above; rise D. falls​ below; fall

C. rises​ above; rise

Along the​ long-run Phillips​ curve, _______. A. a fall in the inflation rate brings a higher unemployment rate B. the inflation rate is constant C. the unemployment rate is constant at the natural unemployment rate D. an increase in the unemployment rate brings a lower inflation rate

C. the unemployment rate is constant at the natural unemployment rate

Deflation is​ _______. A. created by a decrease in a​ country's exports B. created by a fall in profit expectations C. a​ one-time fall in the price level D. a persistently falling price level

D. a persistently falling price level

The best forecast​ available, which is based on all the relevant information is called​ _______. A. a correct forecast B. a correct expectation C. a rational forecast D. a rational expectation

D. a rational expectation

A​ cost-push rise in the price level can arise from an increase in​ _______. A. government expenditure B. the quantity of money C. exports D. the money wage rate or money prices of raw materials

D. the money wage rate or money prices of raw materials

A stagflation can turn into a​ cost-push inflation process when​ _______. A. the money wage rate decreases B. the quantity of money persistently decreases C. taxes consistently increase D. the quantity of money persistently increases

D. the quantity of money persistently increases

A stagflation can turn into a​ cost-push inflation process when​ _______. A. the quantity of money persistently decreases B. the money wage rate decreases C. taxes consistently increase D. the quantity of money persistently increases

D. the quantity of money persistently increases

A movement​ ______ along the​ short-run Phillips curve occurs when there is an​ ______ increase in aggregate demand. A. ​down; unexpected B. ​down; expected C. ​up; expected D. ​up; unexpected

D. ​up; unexpected