Exam 17: The Short-Run Tradeoff Between Inflation and Unemployment

A) A and 1.
B) back to C and 3.
C) D and 4.
D) F and 5.

Correct Answer

verified

Show Answer

A) high unemployment puts upward pressures on wages and prices.
B) given the historical evidence, a combination of low inflation and low unemployment was not possible.
C) Both A and B are correct.
D) None of the above are correct.

Correct Answer

verified

Show Answer

A) falls, so there are upward pressures on wages and prices.
B) falls, so there are downward pressures on wages and prices.
C) rises, so there are upward pressures on wages and prices.
D) rises, so there are downward pressures on wages and prices.

Correct Answer

verified

Show Answer

A) results in a more favorable trade-off between inflation and unemployment.
B) results in a more favorable trade-off between inflation and the growth rate of real GDP.
C) represents an adverse shock to aggregate supply.
D) represents a favorable shock to aggregate supply.

Correct Answer

verified

Show Answer

A) had virtually no impact on output, just as the classical dichotomy suggested.
B) was associated with rising output, perhaps due to expansionary fiscal policy.
C) caused output to fall, but by less than the typical estimate of the sacrifice ratio suggested.
D) None of the above is correct.

Correct Answer

verified

Show Answer

A) adverse supply shocks that shifted the short-run Phillips curve left.
B) adverse supply shocks that shifted the short-run Phillips curve right.
C) favorable supply shocks that shifted the short-run Phillips curve left.
D) favorable supply shocks that shifted the short-run Phillips curve right.

Correct Answer

verified

Show Answer

A) the level of GDP
B) the unemployment rate
C) expected inflation
D) employment

Correct Answer

verified

Show Answer

A) can not exploit a tradeoff between inflation and unemployment in either the short or long run.
B) can exploit a tradeoff between inflation and unemployment in the short run but not in the long run.
C) can exploit a tradeoff between inflation and unemployment in both the short run and the long run.
D) can exploit a tradeoff between inflation and unemployment in the long run, but not the short run.

Correct Answer

verified

Show Answer

Correct Answer

verified

Show Answer

A) unemployment and inflation are higher.
B) unemployment and inflation are lower.
C) unemployment is higher and inflation is lower.
D) unemployment is lower and inflation is higher.

Correct Answer

verified

Show Answer

A) right, so that at any inflation rate unemployment is higher in the short run than before.
B) left, so that at any inflation rate unemployment is higher in the short run than before.
C) right, so that at any inflation rate unemployment is lower in the short run than before.
D) left, so that at any inflation rate unemployment is lower in the short run than before.

Correct Answer

verified

Show Answer

A) higher unemployment and lower output.
B) higher unemployment and higher output.
C) lower unemployment and lower output.
D) lower unemployment and higher output.

Correct Answer

verified

Show Answer

A) the long run and the short run.
B) the long run but not the short run.
C) the short run but not the long run.
D) neither the short run nor the long run.

Correct Answer

verified

Show Answer

A) both the natural rate of unemployment and the inflation rate
B) the natural rate of unemployment, but not the inflation rate
C) the inflation rate, but not the natural rate of unemployment
D) neither the natural unemployment rate nor the inflation rate

Correct Answer

verified

Show Answer