Question 1

As the proportion of labor contracts that index wages to prices declines,we would expect that

Accepted Answer

A)  a reduction in the unemployment rate will now have a smaller effect on inflation.
B)  the natural rate of unemployment will increase.
C)  the natural rate of unemployment will decrease.
D)  nominal wages will become more sensitive to changes in unemployment.E) None of the above
F) C) and D)

Question 2

Which of the following individuals first discovered the relationship between unemployment and inflation?

Accepted Answer

A)  Solow
B)  Samuelson
C)  Friedman
D)  PhillipsE) B) and C)
F) A) and D)

Question 3

When a worker's nominal wage is indexed,the nominal wage is usually automatically adjusted based on movements in which of the following variables?

Accepted Answer

A)  productivity
B)  the price of the firm's product
C)  the average wage in the country
D)  the average wage in the industry
E)   none of the aboveF) B) and D)
G) B) and C)

Question 4

Explain how changes in the proportion of contracts that are indexed affect how a given change in monetary policy will affect economic activity.

Accepted Answer

An increase in nominal money growth will...

Question 5

Explain how the original Phillips curve differs from the expectations-augmented Phillips curve (or the modified,or accelerationist Phillips curve).

Accepted Answer

The original Phillips curve did not take...

Question 6

During the 1980s and early 1990s,it was believed that the natural rate of unemployment in the U.S.was equal to

Accepted Answer

A)  4%.
B)  4.5%.
C)  5%.
D)  6.5%.
E)   7%.F) A) and B)
G) A) and C) D

Question 7

Assume that expected inflation is based on the following: πᵉt = θπt₋₁. If θ = 1,we know that

Accepted Answer

A)  a reduction in the unemployment rate will have no effect on inflation.
B)  low rates of unemployment will cause steadily increasing rates of inflation.
C)  the actual unemployment rate will not deviate from the natural rate of unemployment.
D)  the Phillips curve illustrates the relationship between the level of inflation rate and the level of the unemployment rate.E) All of the above
F) B) and D)

Question 8

Which of the following will most likely cause a change in the natural rate of unemployment?

Accepted Answer

A)  changes in monetary policy
B)  changes in fiscal policy
C)  changes in expected inflation
D)  all of the above
E)   none of the aboveF) A) and B)
G) C) and E)

Question 9

Assume that expected inflation is based on the following: πᵉt = θπt₋₁.If θ = 0,we know that

Accepted Answer

A)  a reduction in the unemployment rate will have no effect on inflation.
B)  low rates of unemployment will cause steadily increasing rates of inflation.
C)  high rates of unemployment will cause steadily declining rates of inflation.
D)  the Phillips curve illustrates the relationship between the level of inflation rate and the level of the unemployment rate.E) B) and C)
F) None of the above

Question 10

Suppose policy makers overestimate the natural rate of unemployment.In situations like these,policy makers will likely implement policies that result in

Accepted Answer

A)  less unemployment than necessary.
B)  an unemployment rate that is "too low."
C)  a lower inflation rate than necessary.
D)  a steadily increasing inflation rate.
E)   overly expansionary monetary and fiscal policy.F) A) and D)
G) A) and E)

Question 11

For this question,assume that the Phillips curve equation is represented by the following: πt - πt₋₁ = (m + z) - αut.Which of the following will not cause an increase in the natural rate of unemployment?

Accepted Answer

A)  a reduction in m
B)  a reduction in z
C)  an increase in α
D)  an increase in the expected rate of inflation
E)   all of the aboveF) D) and E)
G) A) and B)

Question 12

As of 2009,what was the last year that U.S.experienced deflation?

Accepted Answer

A)  1933
B)  1955
C)  1973
D)  1991
E)   2001F) B) and E)
G) A) and E)

Question 13

Use the following Phillips curve equation to answer this question: πt - πt₋₁ = (m + z) - αut.Which of the following will cause an increase in the natural rate of unemployment?

Accepted Answer

A)  a reduction in m
B)  an increase in z
C)  an increase in α
D)  a reduction in expected inflation
E)   none of the aboveF) A) and C)
G) A) and E)

Question 14

Suppose the Phillips curve is represented by the following equation: πt - πt₋₁ = 20 - 2ut.Given this information,which of the following is most likely to occur if the actual unemployment in any period is equal to 6%?

Accepted Answer

A)  the rate of inflation will tend to increase
B)  the rate of inflation will be constant
C)  the rate of inflation will tend to decrease
D)  none of the aboveE) None of the above
F) A) and B) A

Question 15

Why has the U.S.natural rate of unemployment fallen since the early 1990s?

Accepted Answer

Researchers have offer a number of explanations: Increased globalization and stronger competition between US and foreign firms may have led to a decrease in monopoly power and a decrease in the markup; The nature of the labor market has changed; the aging of the US population; an increase in the prison population and the increase in the number of workers on disability.

Question 16

Data for which country were first used to illustrate the relationship between unemployment and inflation (i.e.,the original Phillips curve) ?

Accepted Answer

A)  France
B)  United States
C)  Canada
D)  Germany
E)   none of the aboveF) All of the above
G) B) and E)

Question 17

For this question,assume that individuals form expectations of inflation according to the following equation πᵉt = θπt₋₁.From 1970 on,the value of θ for this equation

Accepted Answer

A)  increased over time and approached 1.
B)  decreased over time and approached zero.
C)  remained constant at zero.
D)  remained constant at negative one.
E)   none of the aboveF) B) and D)
G) A) and D)

Question 18

The original Phillips curve implied or assumed that

Accepted Answer

A)  the markup over labor costs was zero.
B)  the expected rate of inflation would be zero.
C)  the actual and expected rates of inflation would always be equal.
D)  all of the above
E)   none of the aboveF) B) and D)
G) B) and C)

Question 19

Which of the following individuals first discovered the relationship between unemployment and inflation for the United States?

Accepted Answer

A)  Solow and Friedman
B)  Samuelson and Solow
C)  Friedman and Phillips
D)  Friedman and PhelpsE) B) and C)
F) B) and D)

Question 20

Which of the following assumptions best characterized the assumption about how individuals formed expectations of inflation by the early 1970s?

Accepted Answer

A)  Expected inflation for the current year was smaller than the previous year's inflation rate.
B)  Expected inflation for the current year was approximately equal to the previous year's inflation rate.
C)  Expected inflation for the current year was less than the previous year's inflation rate.
D)  Expected inflation for the current year equal to the average inflation rate over the past five years.
E)   Expected inflation for the current year equal to the average inflation rate over the past ten years.F) A) and B)
G) B) and D)

Exam 8: The Phillips Curve, the Natural Rate of Unemployment, and Inflation

As the proportion of labor contracts that index wages to prices declines,we would expect that

Correct Answer
verified

Which of the following individuals first discovered the relationship between unemployment and inflation?

Correct Answer
verified

When a worker's nominal wage is indexed,the nominal wage is usually automatically adjusted based on movements in which of the following variables?

Correct Answer
verified

Explain how changes in the proportion of contracts that are indexed affect how a given change in monetary policy will affect economic activity.

Correct Answer
verified
An increase in nominal money growth will...
View Answer

Explain how the original Phillips curve differs from the expectations-augmented Phillips curve (or the modified,or accelerationist Phillips curve).

Correct Answer
verified
The original Phillips curve did not take...
View Answer

During the 1980s and early 1990s,it was believed that the natural rate of unemployment in the U.S.was equal to

Correct Answer
verified
D

Assume that expected inflation is based on the following: πᵉt = θπt₋₁. If θ = 1,we know that

Correct Answer
verified

Which of the following will most likely cause a change in the natural rate of unemployment?

Correct Answer
verified

Assume that expected inflation is based on the following: πᵉt = θπt₋₁.If θ = 0,we know that

Correct Answer
verified

Suppose policy makers overestimate the natural rate of unemployment.In situations like these,policy makers will likely implement policies that result in

Correct Answer
verified

For this question,assume that the Phillips curve equation is represented by the following: πt - πt₋₁ = (m + z) - αut.Which of the following will not cause an increase in the natural rate of unemployment?

Correct Answer
verified

As of 2009,what was the last year that U.S.experienced deflation?

Correct Answer
verified

Use the following Phillips curve equation to answer this question: πt - πt₋₁ = (m + z) - αut.Which of the following will cause an increase in the natural rate of unemployment?

Correct Answer
verified

Suppose the Phillips curve is represented by the following equation: πt - πt₋₁ = 20 - 2ut.Given this information,which of the following is most likely to occur if the actual unemployment in any period is equal to 6%?

Correct Answer
verified
A

Why has the U.S.natural rate of unemployment fallen since the early 1990s?

Data for which country were first used to illustrate the relationship between unemployment and inflation (i.e.,the original Phillips curve) ?

Correct Answer
verified

For this question,assume that individuals form expectations of inflation according to the following equation πᵉt = θπt₋₁.From 1970 on,the value of θ for this equation

Correct Answer
verified

The original Phillips curve implied or assumed that

Correct Answer
verified

Which of the following individuals first discovered the relationship between unemployment and inflation for the United States?

Correct Answer
verified

Which of the following assumptions best characterized the assumption about how individuals formed expectations of inflation by the early 1970s?

Correct Answer
verified

Exam 8: The Phillips Curve, the Natural Rate of Unemployment, and Inflation

As the proportion of labor contracts that index wages to prices declines,we would expect that

Correct AnswerverifiedShow Answer

Which of the following individuals first discovered the relationship between unemployment and inflation?

Correct AnswerverifiedShow Answer

When a worker's nominal wage is indexed,the nominal wage is usually automatically adjusted based on movements in which of the following variables?

Correct AnswerverifiedShow Answer

Explain how changes in the proportion of contracts that are indexed affect how a given change in monetary policy will affect economic activity.

Correct AnswerverifiedAn increase in nominal money growth will...View AnswerShow Answer

Explain how the original Phillips curve differs from the expectations-augmented Phillips curve (or the modified,or accelerationist Phillips curve).

Correct AnswerverifiedThe original Phillips curve did not take...View AnswerShow Answer

During the 1980s and early 1990s,it was believed that the natural rate of unemployment in the U.S.was equal to

Correct AnswerverifiedD

Assume that expected inflation is based on the following: πᵉt = θπt₋₁. If θ = 1,we know that

Correct AnswerverifiedShow Answer

Which of the following will most likely cause a change in the natural rate of unemployment?

Correct AnswerverifiedShow Answer

Assume that expected inflation is based on the following: πᵉt = θπt₋₁.If θ = 0,we know that

Correct AnswerverifiedShow Answer

Suppose policy makers overestimate the natural rate of unemployment.In situations like these,policy makers will likely implement policies that result in

Correct AnswerverifiedShow Answer

For this question,assume that the Phillips curve equation is represented by the following: πt - πt₋₁ = (m + z) - αut.Which of the following will not cause an increase in the natural rate of unemployment?

Correct AnswerverifiedShow Answer

As of 2009,what was the last year that U.S.experienced deflation?

Correct AnswerverifiedShow Answer

Use the following Phillips curve equation to answer this question: πt - πt₋₁ = (m + z) - αut.Which of the following will cause an increase in the natural rate of unemployment?

Correct AnswerverifiedShow Answer

Suppose the Phillips curve is represented by the following equation: πt - πt₋₁ = 20 - 2ut.Given this information,which of the following is most likely to occur if the actual unemployment in any period is equal to 6%?

Correct AnswerverifiedA

Why has the U.S.natural rate of unemployment fallen since the early 1990s?

Data for which country were first used to illustrate the relationship between unemployment and inflation (i.e.,the original Phillips curve) ?

Correct AnswerverifiedShow Answer

For this question,assume that individuals form expectations of inflation according to the following equation πᵉt = θπt₋₁.From 1970 on,the value of θ for this equation

Correct AnswerverifiedShow Answer

The original Phillips curve implied or assumed that

Correct AnswerverifiedShow Answer

Which of the following individuals first discovered the relationship between unemployment and inflation for the United States?

Correct AnswerverifiedShow Answer

Which of the following assumptions best characterized the assumption about how individuals formed expectations of inflation by the early 1970s?

Correct AnswerverifiedShow Answer

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verified
An increase in nominal money growth will...
View Answer

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verified
The original Phillips curve did not take...
View Answer

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D

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A

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