SOL_CHAP_35 - SOL CHAP 35 THE SHORT- RUN TRADE OFF BETWEEN...

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SOL CHAP 35 THE SHORT- RUN TRADE OFF BETWEEN INFLATION AND UNEMPLOYMENT PART 1: Multiple choices: 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. One determinant of the long-run average unemployment rate is the a.market power of unions, while the inflation rate depends primarily upon government spending. b.minimum wage, while the inflation rate depends primarily upon the money supply growth rate. c.rate of growth of the money supply, while the inflation rate depends primarily upon the market power of unions. d.existence of efficiency wages, while the inflation rate depends primarily upon the extent to which firms are competitive. ANS: B PTS: 1 DIF: 1 REF: 35-1 TOP: Long-run Phillips curveMSC: Interpretive 3. The misery index is supposed to measure the a.social cost of unemployment. b.health of the economy. c.lost output associated with a particular unemployment rate. d.short-run tradeoff between inflation and unemployment. ANS: B PTS: 1 DIF: 1 REF: 35-1 TOP: Misery index MSC: Definitional 4. In the long run, the inflation rate depends primarily on a.the ability of unions to raise wages. b.government spending. c.the money supply growth rate. d.the monopoly power of firms. ANS: C PTS: 1 DIF: 2 REF: 35-1 TOP: InflationMSC: Definitional
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a.short-run tradeoff between inflation and unemployment. b.short-run tradeoff between the actual unemployment rate and the natural rate of unemployment. c.long-run tradeoff between inflation and unemployment. d.long-run tradeoff between the actual unemployment rate and the natural rate of unemployment. ANS: A PTS: 1 DIF: 1 REF: 35-1 TOP: Phillips curve MSC: Definitional 6. If policymakers decrease aggregate demand, the price level a.falls, but unemployment rises. b.and unemployment fall. c.and unemployment rise. d.rises, but unemployment falls. ANS: A PTS: 1 DIF: 1 REF: 35-1 TOP: Short-run Phillips curve | Contractionary policy MSC: Analytical 7. If the government raises government expenditures, 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: Fiscal policy MSC: Analytical 8. 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 9. Unemployment would decrease and prices increase if a.aggregate demand shifted right.
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SOL_CHAP_35 - SOL CHAP 35 THE SHORT- RUN TRADE OFF BETWEEN...

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