Question 1

Hungry Jacks is paying $9 an hour to its workers.If the expected inflation rate equals the actual inflation rate and both are 10 per cent a year,then to keep the real wage rate constant in a year the money wage rate must

Accepted Answer

To keep the real wage rate constant, the money wage rate must increase by the same percentage as the inflation rate. In this case, the inflation rate is 10%, so the money wage rate must also increase by 10%.

$9.00 + (10% x $9.00) = $9.90

Therefore, the money wage rate must rise to $9.90 an hour.

Question 2

-In the figure above,the natural unemployment rate is

Accepted Answer

The answer of 
-In the figure above,the natural unemployment rate...

Question 3

-In the figure above,the expected inflation rate is

Accepted Answer

The expected inflation rate is 4 percent, as indicated in the figure.

Question 4

The short-run Phillips curve shows ________ between the unemployment rate and the inflation rate,and the long-run Phillips curve shows ________ between the unemployment rate and the inflation rate.

Accepted Answer

The short-run Phillips curve illustrates a negative relationship between the unemployment rate and the inflation rate, suggesting that lower unemployment comes with higher inflation. However, the long-run Phillips curve shows no relationship between the two, indicating that in the long term, inflation does not affect unemployment rates, aligning with the natural rate of unemployment theory.

Question 5

In the long run,the inflation rate

Accepted Answer

In the long run, the inflation rate can take on any value. This is because in the long run, the economy's output is at potential level and unemployment is at its natural rate. With no output gap, changes in inflation are solely determined by the available money supply and velocity of money, which are not fixed and can lead to any level of inflation.

Question 6

The short-run Phillips curve is downward sloping because

Accepted Answer

The short-run Phillips curve is downward sloping because it shows an inverse relationship between inflation and unemployment, meaning that unemployment can be above or below the natural rate, affecting inflation levels.

Question 7

In order to keep the real wage rate constant,the

Accepted Answer

To maintain the real wage rate constant, the money wage rate must increase at the same rate as inflation. This ensures that the purchasing power of the wages remains unchanged despite the increase in prices.

Question 8

The lack of a long-run tradeoff between the unemployment rate and the inflation rate means that

Accepted Answer

The lack of a long-run tradeoff between unemployment and inflation means that increasing the inflation rate would not lead to a reduction in the natural unemployment rate. In other words, there is no way to permanently decrease unemployment by allowing for higher levels of inflation. This concept is often referred to as the Phillips Curve. Options A, B, D, and E are incorrect because they do not accurately reflect the relationship between unemployment, inflation, and the natural rate of unemployment.

Question 9

-In the figure above,the natural unemployment rate is

Accepted Answer

The natural unemployment rate is the rate of unemployment that exists even when the economy is at full employment. In the figure, the natural unemployment rate is 6 percent.

Question 10

In the long run,there is

Accepted Answer

The answer of In the long run,there is
...

Question 11

Comparing the short-run Phillips curve and the long-run Phillips curve,we see that there is

Accepted Answer

The short-run Phillips curve shows a tradeoff between inflation and unemployment in the short run, but this tradeoff disappears in the long run as unemployment returns to its natural rate. The long-run Phillips curve is a vertical line at the natural rate of unemployment, indicating that there is no tradeoff between inflation and unemployment in the long run.

Question 12

On the long-run Phillips curve,the unemployment rate

Accepted Answer

The long-run Phillips curve is vertical at the natural rate of unemployment, indicating that in the long run, there is no trade-off between inflation and unemployment. This means the unemployment rate equals the natural unemployment rate, but the inflation rate can vary depending on factors like monetary policy, without affecting the natural rate of unemployment.

Question 13

The long-run Phillips curve applies when the economy is at full employment,so the long-run Phillips curve is ________,which demonstrates that changes in the inflation rate ________ effect on unemployment.

Accepted Answer

In the long-run, the economy is at its natural rate of unemployment, also known as full employment. Therefore, the long-run Phillips curve is vertical, indicating that changes in the inflation rate have no effect on unemployment. This is because in the long-run, economic agents adjust their expectations and behavior based on changes in the inflation rate, leading to a natural rate of unemployment that is unaffected by changes in demand.

Question 14

-In the figure above,the expected inflation rate is

Accepted Answer

The answer of 
-In the figure above,the expected inflation rate...

Question 15

The long-run Phillips curve indicates that

Accepted Answer

The long-run Phillips curve is vertical at the natural rate of unemployment, indicating that in the long run, there is no trade-off between inflation and unemployment. This means any inflation rate can be associated with the natural rate of unemployment, as inflation expectations adjust over time.

Question 16

The expected inflation rate is the inflation rate that people forecast and use to help set

Accepted Answer

The expected inflation rate is used by workers and employers to set the money wage rate, as it affects the purchasing power of wages.

Question 17

Along the long-run Phillips curve,the unemployment rate ________,and the inflation rate ________.

Accepted Answer

The answer of Along the long-run Phillips curve,the unemployment rate...

Question 18

At full employment,the expected inflation rate is

Accepted Answer

At full employment, the economy is producing its potential output and any increase in demand will result in an increase in prices, leading to inflation. This means that the expected inflation rate is equal to the actual inflation rate.

Question 19

The short-run Phillips curve is ________,and the long-run Phillips curve is ________.

Accepted Answer

The short-run Phillips curve shows an inverse relationship between unemployment and inflation, resulting in a downward sloping curve. In the long run, however, inflation expectations adjust, and there is only a natural rate of unemployment, resulting in a vertical Phillips curve.

Question 20

The short-run Phillips curve shows only a short-run tradeoff between the unemployment rate and the inflation rate because in the long run,the

Accepted Answer

The answer of The short-run Phillips curve shows only a...

Quiz 13: The Short-Run Policy Trade Off

Hungry Jacks is paying $9 an hour to its workers.If the expected inflation rate equals the actual inflation rate and both are 10 per cent a year,then to keep the real wage rate constant in a year the money wage rate must

-In the figure above,the natural unemployment rate is

-In the figure above,the expected inflation rate is

The short-run Phillips curve shows between the unemployment rate and the inflation rate,and the long-run Phillips curve shows between the unemployment rate and the inflation rate.

In the long run,the inflation rate

The short-run Phillips curve is downward sloping because

In order to keep the real wage rate constant,the

The lack of a long-run tradeoff between the unemployment rate and the inflation rate means that

-In the figure above,the natural unemployment rate is

In the long run,there is

Comparing the short-run Phillips curve and the long-run Phillips curve,we see that there is

On the long-run Phillips curve,the unemployment rate

The long-run Phillips curve applies when the economy is at full employment,so the long-run Phillips curve is ,which demonstrates that changes in the inflation rate effect on unemployment.

-In the figure above,the expected inflation rate is

The long-run Phillips curve indicates that

The expected inflation rate is the inflation rate that people forecast and use to help set

Along the long-run Phillips curve,the unemployment rate ,and the inflation rate .

At full employment,the expected inflation rate is

The short-run Phillips curve is ,and the long-run Phillips curve is .

The short-run Phillips curve shows only a short-run tradeoff between the unemployment rate and the inflation rate because in the long run,the