Question 1

The natural rate hypothesis concludes that when the inflation rate increases,then,in the long run,there is

Accepted Answer

The natural rate hypothesis suggests that in the long run, higher inflation leads to an upward shift of the short-run Phillips curve, as expectations adjust and the natural rate of unemployment remains unchanged.

Question 2

The natural rate hypothesis states that when the inflation rate

Accepted Answer

The natural rate hypothesis suggests that there is a long-run relationship between inflation and unemployment, and that deviations from the natural rate of unemployment are only temporary. Therefore, if the inflation rate changes, it will cause the unemployment rate to change temporarily, but eventually it will return to the natural rate of unemployment.

Question 3

The natural rate hypothesis asserts that

Accepted Answer

The answer of The natural rate hypothesis asserts that
...

Question 4

Suppose an economy experiences a permanent increase in its expected inflation rate.As a result,there is

Accepted Answer

The short-run Phillips curve shows the inverse relationship between inflation and unemployment in the short run. A permanent increase in the expected inflation rate would lead workers to demand higher wages to compensate for the inflation. As a result, firms would have to pay higher wages, leading to an increase in production costs and higher prices. This shift to higher prices would, in turn, lead to a further increase in the expected inflation rate. Therefore, we can expect an upward shift of the short-run Phillips curve.

Question 5

An increase in the expected inflation rate

Accepted Answer

An increase in the expected inflation rate will cause firms and workers to expect higher prices, which will lead to an increase in wages and prices. This means that there will be higher inflation at any given level of unemployment, which will cause the short-run Phillips curve to shift upward.

Question 6

The natural rate hypothesis states that when the inflation rate ________,in the short run the unemployment rate ________ and in the long run the unemployment rate ________.

Accepted Answer

The answer of The natural rate hypothesis states that when...

Question 7

-Based on the above table,if the current price level is 100 and the unemployment rate is 4 per cent,then the

Accepted Answer

The answer of 
-Based on the above table,if the current...

Question 8

According to the natural rate hypothesis,if the economy begins at full employment with an unemployment rate of 5 per cent and then the inflation rate increases from 2 per cent to 4 per cent,then the economy will

Accepted Answer

According to the natural rate hypothesis, if the inflation rate increases above its expected rate, then in the short run, the unemployment rate will fall below its natural rate. This means that there will be a temporary decrease in unemployment, but eventually, the economy will return to its natural rate of unemployment. Therefore, option C is the correct answer. Option A is incorrect because natural rate hypothesis suggests that the natural rate of unemployment is independent of inflation. Option B is incorrect because the natural rate hypothesis suggests that unemployment cannot go below its natural rate even temporarily. Option D is incorrect because the natural rate hypothesis suggests that the economy will eventually return to its natural rate of unemployment, which is 5% in this case. Option E is incorrect because the natural rate hypothesis does not suggest a new lower unemployment rate.

Question 9

According to the natural rate hypothesis,in the short run an increase in the inflation rate brings

Accepted Answer

According to the natural rate hypothesis, in the short run, an increase in the inflation rate can lead to a decrease in the unemployment rate due to the Phillips curve relationship, where higher inflation can temporarily reduce unemployment.

Question 10

If the expected inflation rate rises,then the short-run Phillips curve ________ and the long-run Phillips curve ________.

Accepted Answer

When the expected inflation rate rises, the short-run Phillips curve shifts upward as firms expect higher inflation and adjust their prices accordingly. However, in the long run, the Phillips curve is vertical, indicating that there is no trade-off between inflation and unemployment, and therefore does not shift with changes in expected inflation.

Question 11

Economies with higher expected inflation rates have short-run Phillips curves that are

Accepted Answer

Higher expected inflation shifts the short-run Phillips curve to the right, indicating a higher rate of inflation for any given level of unemployment.

Question 12

The figure above shows some Phillips curves for an economy.
-Along the short-run Phillips curve SRPC₀ in the figure above,the expected inflation rate is

Accepted Answer

Along the short-run Phillips curve SRPC₀, the unemployment rate is at its natural rate of 5%, leading to an actual inflation rate of 3%. This is the point where the SRPC intersects with the long-run Phillips curve LRPC, which represents the natural rate of inflation. Therefore, the expected inflation rate along SRPC₀ is also 3%.

Question 13

The shift of the short-run Phillips curve in the figure above is the result of

Accepted Answer

The answer of 
The shift of the short-run Phillips curve...

Question 14

The figure above shows some Phillips curves for an economy.
-The short-run Phillips curve in the figure above shifts from SRPC₀ to SRPC₁
As a result of

Accepted Answer

The answer of  
The figure above shows some Phillips...

Question 15

The natural rate hypothesis concludes that when the inflation rate increases,then,in the short run,there is

Accepted Answer

An increase in the inflation rate, according to the natural rate hypothesis, results in an upward movement along the short-run Phillips curve. This is because the short-run Phillips curve illustrates the trade-off between inflation and unemployment for a given expectation of inflation. When actual inflation increases, it typically leads to lower unemployment in the short run, moving up along the curve.

Question 16

The figure above shows some Phillips curves for an economy.
-The short-run Phillips curve shifts when

Accepted Answer

The short-run Phillips curve shifts when there is a change in the natural unemployment rate or when there is a change in the expected inflation rate. These factors alter the trade-off between inflation and unemployment.

Question 17

The figure above shows some Phillips curves for an economy.
-Along the short-run Phillips curve SRPC₀ in the figure above,the natural unemployment rate is

Accepted Answer

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

Question 18

The figure above shows some Phillips curves for an economy.
-Along the short-run Phillips curve SRPC₀ in the figure above,the natural unemployment rate is

Accepted Answer

The answer of  
The figure above shows some Phillips...

Question 19

-Based on the above table,if the current price level is 100 and the natural unemployment rate is 5 per cent,what is the expected inflation rate?

Accepted Answer

The answer of 
-Based on the above table,if the current...

Question 20

If the expected inflation rate changes,the long-run Phillips curve ________,and the short-run Phillips curve ________.

Accepted Answer

The long-run Phillips curve is vertical and does not shift with changes in expected inflation. However, the short-run Phillips curve shifts upward with an increase in expected inflation.

Quiz 13: The Short-Run Policy Trade Off

The natural rate hypothesis concludes that when the inflation rate increases,then,in the long run,there is

The natural rate hypothesis states that when the inflation rate

The natural rate hypothesis asserts that

Suppose an economy experiences a permanent increase in its expected inflation rate.As a result,there is

An increase in the expected inflation rate

The natural rate hypothesis states that when the inflation rate ,in the short run the unemployment rate and in the long run the unemployment rate .

-Based on the above table,if the current price level is 100 and the unemployment rate is 4 per cent,then the

According to the natural rate hypothesis,if the economy begins at full employment with an unemployment rate of 5 per cent and then the inflation rate increases from 2 per cent to 4 per cent,then the economy will

According to the natural rate hypothesis,in the short run an increase in the inflation rate brings

If the expected inflation rate rises,then the short-run Phillips curve and the long-run Phillips curve .

Economies with higher expected inflation rates have short-run Phillips curves that are

The figure above shows some Phillips curves for an economy. -Along the short-run Phillips curve SRPC₀ in the figure above,the expected inflation rate is

The shift of the short-run Phillips curve in the figure above is the result of

The figure above shows some Phillips curves for an economy. -The short-run Phillips curve in the figure above shifts from SRPC₀ to SRPC₁ As a result of

The natural rate hypothesis concludes that when the inflation rate increases,then,in the short run,there is

The figure above shows some Phillips curves for an economy. -The short-run Phillips curve shifts when

The figure above shows some Phillips curves for an economy. -Along the short-run Phillips curve SRPC₀ in the figure above,the natural unemployment rate is

The figure above shows some Phillips curves for an economy. -Along the short-run Phillips curve SRPC₀ in the figure above,the natural unemployment rate is

-Based on the above table,if the current price level is 100 and the natural unemployment rate is 5 per cent,what is the expected inflation rate?

If the expected inflation rate changes,the long-run Phillips curve ,and the short-run Phillips curve .