Question 1

The imperfect-information model bases the difference in the short-run and long-run aggregate supply curve on:

Accepted Answer

A)   sticky wages.
B)   sticky prices.
C)   temporary misperceptions about prices.
D)   procyclical real wages.

Question 2

A recession may alter an economy's natural rate of unemployment in all of the following ways except by:

Accepted Answer

A)   changing an unemployed individual's attitude toward work.
B)   reducing an unemployed worker's job skills.
C)   permanently reducing the money supply.
D)   altering the wage-setting process.

Question 3

Demand-pull inflation is the result of:

Accepted Answer

A)   high aggregate demand.
B)   low aggregate demand.
C)   favourable supply shocks.
D)   adverse supply shocks.

Question 4

Use the aggregate demand-aggregate supply model to graphically illustrate the difference between demand-pull and cost-push inflation.Explain your graph in words.

Accepted Answer

Starting at long-run equilibrium at A,a...

Question 5

Based on the Phillips curve,unexpected movements in inflation are related to ______ and based on the short-run aggregate supply curve,unexpected movements in the price level are related to ______.

Accepted Answer

A)   sticky wages; sticky prices
B)   sticky prices; sticky wages
C)   output; unemployment
D)   unemployment; output

Question 6

a.What is the sacrifice ratio?
b.What factor could possibly lower the sacrifice ratio for an economy?
c.What factor could possibly increase the sacrifice ratio for an economy?

Accepted Answer

a. The sacrifice ratio is the percentage...

Question 7

When adaptive expectations are used to model inflation expectations in the Phillips curve,then the natural rate of unemployment is called the ______ rate of unemployment.

Accepted Answer

A)   structural
B)   cyclical
C)   short-run aggregate supply
D)   nonaccelerating inflation

Question 8

Use the following to answer questions :
Exhibit: AD-AS Shifts
 1,if there is an unexpected monetary contraction that shifts aggregate demand from AD1 to AD3,then the long-run neutrality of money is represented by the movement from: A)  A to B. B)  A to G. C)  A to C. D)  A to D." class="answers-bank-image d-inline" rel="preload" >
-(Exhibit: AD-AS Shifts) Starting from long-run equilibrium at A with output equal to Y and the price level equal to P1,if there is an unexpected monetary contraction that shifts aggregate demand from AD1 to AD3,then the long-run neutrality of money is represented by the movement from:

Accepted Answer

A)   A to B.
B)   A to G.
C)   A to C.
D)   A to D.

Question 9

Use the following to answer questions :
Exhibit: AD-AS Shifts
 1,if there is an unexpected monetary contraction that shifts aggregate demand from AD1 to AD3,then the short-run nonneutrality of money is represented by the movement from: A)  A to B. B)  A to G. C)  A to C. D)  A to D." class="answers-bank-image d-inline" rel="preload" >
-(Exhibit: AD-AS Shifts) Starting from long-run equilibrium at A with output equal to Y and the price level equal to P1,if there is an unexpected monetary contraction that shifts aggregate demand from AD1 to AD3,then the short-run nonneutrality of money is represented by the movement from:

Accepted Answer

A)   A to B.
B)   A to G.
C)   A to C.
D)   A to D.

Question 10

In the case of demand-pull inflation,other things being equal:

Accepted Answer

A)   both the inflation rate and the unemployment rate rise at the same time.
B)   the unemployment rate rises but the inflation rate falls.
C)   the inflation rate rises but the unemployment rate falls.
D)   both the inflation rate and the unemployment rate fall.

Question 11

According to the natural-rate hypothesis,fluctuations in aggregate demand affect output in:

Accepted Answer

A)   both the short run and the long run.
B)   only in the short run.
C)   only in the long run.
D)   in neither the short run nor the long run.

Question 12

Along a short-run aggregate supply curve,output is related to unexpected movements in the ______.Along a Phillips curve,unemployment is related to unexpected movements in the ______.

Accepted Answer

A)   price level; inflation rate
B)   inflation rate; price level
C)   unemployment rate; price level
D)   price level; level of output

Question 13

After examining international data,the economist Robert Lucas found that aggregate demand has the biggest effect on output in countries where aggregate demand:

Accepted Answer

A)   and prices are most stable.
B)   and prices are most variable.
C)   is most stable but prices are most variable.
D)   is most variable but prices are most stable.

Question 14

The idea that the natural rate of unemployment is increased following extended periods of unemployment is called:

Accepted Answer

A)   Okun's law.
B)   the cold-turkey approach.
C)   the natural-rate hypothesis.
D)   hysteresis.

Question 15

The classical dichotomy breaks down for a Phillips curve,which shows the relationship between a nominal variable,______,and a real variable,______.

Accepted Answer

A)   output; prices
B)   money; output
C)   inflation; unemployment
D)   unemployment; inflation

Question 16

The NAIRU is the:

Accepted Answer

A)   North American institutional rate of unemployment.
B)   natural aggregate investment return on utilization.
C)   nonaccelerating inflation rate of unemployment.
D)   normal American inelastic rate of unemployment.

Question 17

How would an adverse supply shock change the short-run tradeoff between inflation and unemployment? Illustrate your answer using a Phillips curve diagram.

Accepted Answer

An adverse supply shock (

)would shift ...

Question 18

The Phillips curve analysis described in Chapter 13 implies that there is a negative tradeoff between inflation and unemployment in:

Accepted Answer

A)   both the short run and long run.
B)   in the short run only.
C)   in the long run only.
D)   in neither the short run nor the long run.

Question 19

The Phillips curve depends on all of the following forces except:

Accepted Answer

A)   the current exchange rate.
B)   expected inflation.
C)   the deviation of unemployment from its natural rate.
D)   supply shocks.

Question 20

In the sticky-price model,the relationship between output and the price level depends on:

Accepted Answer

A)   the proportion of firms with flexible prices.
B)   the target real wage rate.
C)   the target nominal wage rate.
D)   the implicit agreements between workers and firms.

Exam 13: Aggregate Supply and the Short-Run

After examining international data,the economist Robert Lucas found that aggregate demand has the biggest effect on output in countries where aggregate demand:

Correct Answer
verified

How would an adverse supply shock change the short-run tradeoff between inflation and unemployment? Illustrate your answer using a Phillips curve diagram.

Correct Answer
verified

An adverse supply shock ()would shift ...
View Answer

Use the aggregate demand-aggregate supply model to graphically illustrate the difference between demand-pull and cost-push inflation.Explain your graph in words.

Correct Answer
verified

Starting at long-run equilibrium at A,a...
View Answer

The Phillips curve analysis described in Chapter 13 implies that there is a negative tradeoff between inflation and unemployment in:

Correct Answer
verified

When adaptive expectations are used to model inflation expectations in the Phillips curve,then the natural rate of unemployment is called the ______ rate of unemployment.

Correct Answer
verified

According to the natural-rate hypothesis,fluctuations in aggregate demand affect output in:

Correct Answer
verified

The classical dichotomy breaks down for a Phillips curve,which shows the relationship between a nominal variable,,and a real variable,.

Correct Answer
verified

Correct Answer
verified

The Phillips curve depends on all of the following forces except:

Correct Answer
verified

The idea that the natural rate of unemployment is increased following extended periods of unemployment is called:

Correct Answer
verified

Along a short-run aggregate supply curve,output is related to unexpected movements in the .Along a Phillips curve,unemployment is related to unexpected movements in the .

Correct Answer
verified

The NAIRU is the:

Correct Answer
verified

a.What is the sacrifice ratio? b.What factor could possibly lower the sacrifice ratio for an economy? c.What factor could possibly increase the sacrifice ratio for an economy?

Correct Answer
verified
a. The sacrifice ratio is the percentage...
View Answer

In the case of demand-pull inflation,other things being equal:

Correct Answer
verified

Correct Answer
verified

The imperfect-information model bases the difference in the short-run and long-run aggregate supply curve on:

Correct Answer
verified

Demand-pull inflation is the result of:

Correct Answer
verified

A recession may alter an economy's natural rate of unemployment in all of the following ways except by:

Correct Answer
verified

Based on the Phillips curve,unexpected movements in inflation are related to and based on the short-run aggregate supply curve,unexpected movements in the price level are related to .

Correct Answer
verified

In the sticky-price model,the relationship between output and the price level depends on:

Correct Answer
verified

Exam 13: Aggregate Supply and the Short-Run

After examining international data,the economist Robert Lucas found that aggregate demand has the biggest effect on output in countries where aggregate demand:

Correct AnswerverifiedShow Answer

How would an adverse supply shock change the short-run tradeoff between inflation and unemployment? Illustrate your answer using a Phillips curve diagram.

Correct Answerverified An adverse supply shock ()would shift ...View AnswerShow Answer

Use the aggregate demand-aggregate supply model to graphically illustrate the difference between demand-pull and cost-push inflation.Explain your graph in words.

Correct AnswerverifiedStarting at long-run equilibrium at A,a...View AnswerShow Answer

The Phillips curve analysis described in Chapter 13 implies that there is a negative tradeoff between inflation and unemployment in:

Correct AnswerverifiedShow Answer

When adaptive expectations are used to model inflation expectations in the Phillips curve,then the natural rate of unemployment is called the ______ rate of unemployment.

Correct AnswerverifiedShow Answer

According to the natural-rate hypothesis,fluctuations in aggregate demand affect output in:

Correct AnswerverifiedShow Answer

The classical dichotomy breaks down for a Phillips curve,which shows the relationship between a nominal variable,______,and a real variable,______.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Phillips curve depends on all of the following forces except:

Correct AnswerverifiedShow Answer

The idea that the natural rate of unemployment is increased following extended periods of unemployment is called:

Correct AnswerverifiedShow Answer

Along a short-run aggregate supply curve,output is related to unexpected movements in the ______.Along a Phillips curve,unemployment is related to unexpected movements in the ______.

Correct AnswerverifiedShow Answer

The NAIRU is the:

Correct AnswerverifiedShow Answer

a.What is the sacrifice ratio? b.What factor could possibly lower the sacrifice ratio for an economy? c.What factor could possibly increase the sacrifice ratio for an economy?

Correct Answerverifieda. The sacrifice ratio is the percentage...View AnswerShow Answer

In the case of demand-pull inflation,other things being equal:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The imperfect-information model bases the difference in the short-run and long-run aggregate supply curve on:

Correct AnswerverifiedShow Answer

Demand-pull inflation is the result of:

Correct AnswerverifiedShow Answer

A recession may alter an economy's natural rate of unemployment in all of the following ways except by:

Correct AnswerverifiedShow Answer

Based on the Phillips curve,unexpected movements in inflation are related to ______ and based on the short-run aggregate supply curve,unexpected movements in the price level are related to ______.

Correct AnswerverifiedShow Answer

In the sticky-price model,the relationship between output and the price level depends on:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

An adverse supply shock ()would shift ...
View Answer

Correct Answer
verified

Starting at long-run equilibrium at A,a...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The classical dichotomy breaks down for a Phillips curve,which shows the relationship between a nominal variable,,and a real variable,.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Along a short-run aggregate supply curve,output is related to unexpected movements in the .Along a Phillips curve,unemployment is related to unexpected movements in the .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a. The sacrifice ratio is the percentage...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Based on the Phillips curve,unexpected movements in inflation are related to and based on the short-run aggregate supply curve,unexpected movements in the price level are related to .

Correct Answer
verified

Correct Answer
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