Macro Quation Bank

17989 Words May 6th, 2013 72 Pages
Chapter 35
The Short-Run Trade-off between Inflation and Unemployment

Multiple Choice

1. Closely watched indicators such as the inflation rate and unemployment are released each month by the a. Bureau of the Budget. b. Bureau of Labor Statistics. c. Department of the Treasury. d. President's Council of Economic Advisors.
ANS: B PTS: 1 DIF: 1 REF: 35-1
TOP: Bureau of Labor Statistics MSC: Definitional

2. The misery index is calculated as the a. inflation rate plus the unemployment rate. b. unemployment rate minus the inflation rate. c. actual inflation rate minus the expected inflation rate. d. natural unemployment rate plus the long-run inflation rate.
ANS: A PTS: 1 DIF: 1 REF: 35-1
TOP: Misery
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c. and unemployment rise. d. and unemployment fall.
ANS: A PTS: 1 DIF: 2 REF: 35-1
TOP: Fiscal policy MSC: Analytical

13. If the central bank increases the money supply, in the short run, prices a. rise and unemployment falls. b. fall and unemployment rises. c. and unemployment rise. d. and unemployment fall.
ANS: A PTS: 1 DIF: 2 REF: 35-1
TOP: Expansionary policy MSC: Analytical

14. Unemployment would decrease and prices increase if a. aggregate demand shifted right. b. aggregate demand shifted left. c. aggregate supply shifted right. d. aggregate supply shifted left.
ANS: A PTS: 1 DIF: 2 REF: 35-1
TOP: Short-run equilibrium MSC: Applicative

15. If policymakers expand aggregate demand, then in the long run a. prices will be higher and unemployment will be lower. b. prices will be higher and unemployment will be unchanged. c. prices and unemployment will be unchanged. d. None of the above is correct.
ANS: B PTS: 1 DIF: 2 REF: 35-1
TOP: Long-run aggregate supply | Expansionary policy MSC: Analytical

16. If policymakers decrease aggregate demand, then in the long run a. prices will be lower and unemployment will be higher. b. prices will be lower and unemployment will be unchanged. c. inflation and unemployment will be unchanged. d. None of the above is correct.
ANS: B PTS: 1 DIF: 2 REF: 35-1
TOP: Long-run aggregate supply | Contractionary policy MSC:

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