Exam 13: Unemployment and Inflation

A) shifts the Phillips curve up and to the right.
B) shifts the Phillips curve down and to the left.
C) increases the natural unemployment rate.
D) increases the expected inflation rate.

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A) a change in the natural rate of unemployment
B) a change in unemployment rate
C) a change in inflation rate
D) a change in GDP

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A) money supply should growth faster.
B) government should increase its spending.
C) money supply growth should be rapidly reduced to bring down the expected inflation.
D) government should announce its commitment to the future contractionary fiscal policy,but change it when it is not needed anymore.

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The unemployment rate rises as the econo...

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A) transfers wealth from lenders to borrowers.
B) transfers wealth from borrowers to lenders.
C) increases menu costs.
D) damages the role of prices as signals in the economy.

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Changes in the natural rate of unemploym...

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A) an infinite
B) a high
C) a low
D) a negative

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A) damages the role of prices as signals in the economy.
B) transfers wealth from borrowers to lenders.
C) decreases menu costs.
D) increases the purchasing power of money.

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A) If inflation rate is zero,unemployment rate will be zero.
B) If unanticipated inflation rate is zero,unemployment rate will be zero.
C) If unanticipated inflation rate is zero,cyclical unemployment rate will be zero
D) If unanticipated inflation rate is zero,cyclical unemployment rate will be negative.

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A) can exploit the Phillips curve in the short run.
B) cannot exploit the Phillips curve in the short run.
C) can keep the unemployment rate permanently below the natural rate by permanently running a high rate of inflation.
D) cannot keep the unemployment rate permanently below the natural rate by permanently running a high rate of inflation.

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A) tax credits or subsidies for training and relocating unemployed workers
B) lowering consumption taxes
C) lowering payroll taxes
D) using aggressive policy to keep the actual unemployment rate low

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5 - 6 = -h...

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A) costs of disinflation were smaller for rapid disinflation than for gradual disinflation.
B) costs of disinflation were larger for rapid disinflation than for gradual disinflation.
C) costs of disinflation were about the same for both rapid and gradual disinflation.
D) costs of disinflation were smaller when the Central Bank had a strong inflation-fighting reputation.

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A) policymakers are able to reduce the expected inflation rate.
B) people form their expectations based on rational expectations theory.
C) monetary authorities rapidly decrease the money supply.
D) the government makes a significant budget cut.

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A) Okun's law.
B) the sacrifice ratio.
C) the Solow residual.
D) Planck's constant.

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A) inflation and unemployment.
B) cyclical inflation and structural unemployment.
C) unanticipated inflation and cyclical unemployment.
D) anticipated inflation and structural unemployment.

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A) transfers wealth from lenders to borrowers.
B) transfers wealth from borrowers to lenders.
C) erodes the value of currency.
D) damages the role of prices as signals in the economy.

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Costs of anticipated inflation include a...

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