Question 1

The recovery phase of the inflation-unemployment cycle emerges if

Accepted Answer

The recovery phase of the inflation-unemployment cycle emerges if policymakers respond to a recessionary gap by increasing aggregate demand. This can be done through monetary or fiscal policy measures, such as lowering interest rates, increasing government spending or cutting taxes, to stimulate economic growth and reduce unemployment. Flexible prices and wages may also be helpful, but they are not the key factor driving the recovery phase. Nominal wages and prices rising or higher resource prices may actually hinder the recovery by leading to cost-push inflation and reducing consumer purchasing power.

Question 2

Since 1979 when inflation soared into the double-digit, the Federal Reserve's policies

Accepted Answer

The statement mentions that inflation soared in 1979, implying that the Federal Reserve would have had to take action to combat it. The fact that the statement mentions "reduced tolerance for inflation" suggests that the Federal Reserve's policies have been focused on controlling inflation and keeping it low. Options A, C, and D are not mentioned in the statement and are therefore incorrect.

Question 3

In the United States, through most of the 1990s, the unemployment rate and the inflation rate generally fell.With which phase of the inflation-unemployment cycle does this conform to?

Accepted Answer

The falling unemployment rate and inflation rate in the 1990s in the United States align with the recovery phase of the inflation-unemployment cycle. This is characterized by a decrease in unemployment and a decrease in inflation due to economic expansion and growth.

Question 4

Consider the following statement: "President Nixon expressed satisfaction with last year's economic performance.He said that with inflation and unemployment heading down, the nation 'is on the right course'." Which of the following could have caused this phenomenon?

Accepted Answer

The statement mentions a decrease in both inflation and unemployment, which suggests an increase in output, meaning that the aggregate demand curve shifted to the right due to expansionary fiscal and monetary policies. Option A would lead to higher inflation rates due to a reduction in output, so it cannot be the answer. Option C would lead to lower unemployment rates but higher inflation rates, so it also cannot be the answer. Option D would lead to an increase in the long-run potential output, but it would not have an immediate effect on inflation and unemployment rates.

Question 5

Figure 16-8
 
-Refer to Figure 16-8.The recessionary gap at point 4 was created

Accepted Answer

The answer of Figure 16-8
 
-Refer to Figure 16-8.The recessionary...

Question 6

In the recovery phase of the inflation-unemployment cycle,

Accepted Answer

In the recovery phase of the inflation-unemployment cycle, unemployment falls and economic activity increases, leading to increased demand and potentially rising prices. However, as the economy continues to recover, the rate of inflation should begin to slow down. Therefore, although the price level may continue to rise, the inflation rate is likely to fall as the economy recovers.

Question 7

In early in 1994, the Federal Reserve shifted to a contractionary policy although the economy Was still in a recessionary gap left over from the 1990-1991 recession.Which of the Following best explains this move?

Accepted Answer

The Fed was taking explicit account of the lag in monetary policy. This means that the Fed was aware that monetary policy changes take time to have an effect on the economy and decided to act early to prevent future inflationary pressures. The other choices do not provide a plausible explanation for the Fed's shift to a contractionary policy.

Question 8

In the graph of the inflation-unemployment cycle, the variable on the horizontal axis is _____ and the variable on the vertical axis is _______.

Accepted Answer

In the inflation-unemployment cycle, also known as the Phillips Curve, the horizontal axis typically represents the unemployment rate, while the vertical axis represents the inflation rate.

Question 9

In the recovery phase of the inflation-unemployment cycle, a falling rate of inflation means That the price level is

Accepted Answer

In the recovery phase of the inflation-unemployment cycle, a falling rate of inflation indicates that prices are still rising, but by smaller and smaller percentages. This means that the inflation rate is decreasing, or falling at a decreasing rate, which is represented by choice C.

Question 10

Consider the following statement: "President Carter expressed concern about reports of rising inflation but insisted the economy is on the right course.He pointed to recent reductions in unemployment as evidence that his economic policies are working." Which of the following could have caused this phenomenon?

Accepted Answer

The answer of Consider the following statement: "President Carter expressed...

Question 11

Consider the following statement: "President Nixon expressed satisfaction with last year's economic performance.He said that with inflation and unemployment heading down, the nation 'is on the right course'." Identify the stage of the inflation-unemployment cycle.

Accepted Answer

The statement indicates that inflation and unemployment are both decreasing, which indicates a positive economic trend. This suggests that the economy is in the recovery phase, as it is recovering from a period of recession.

Question 12

Figure 16-8
 
-Refer to Figure 16-8.The movement from point 3 to point 4 is consistent with which Segment in the diagram below?

Accepted Answer

The movement from point 3 to point 4 follows the direction of segment B to C, as indicated by the arrow in the diagram.

Question 13

Figure 16-8
 
-Refer to Figure 16-8.The movement from point 4 to point 5 is consistent with which phase Of the inflation-unemployment cycle?

Accepted Answer

The answer of Figure 16-8
 
-Refer to Figure 16-8.The movement...

Question 14

Which of the following statements is true?

Accepted Answer

The aggregate demand-aggregate supply model attempts to explain the equilibrium level of real GDP and the price level. It does not give us information about inflation or unemployment specifically, but rather looks at the overall macroeconomic output and price levels. Option B is incorrect because while the AD-AS model does consider the price level, it is not specifically focused on inflation. Option C is incorrect as well because the inflation-unemployment cycle is not a widely recognized economic theory or model. Option D references the Phillips curve, which does relate inflation and unemployment, but it is not directly related to the AD-AS model.

Question 15

Which of the following affect the values of inflation and unemployment? 
I.changes in government spending II.expectations about the price level
III.changes in nominal wages IV.changes in money supply

Accepted Answer

All of the given factors affect the values of inflation and unemployment. Changes in government spending can affect both inflation and unemployment through its impact on aggregate demand. Expectations about the price level can affect inflation as firms adjust their prices based on expected future prices. Changes in nominal wages can impact the cost of production and, therefore, inflation. Changes in the money supply can impact both inflation and unemployment through its effect on aggregate demand and the cost of borrowing.

Question 16

In the recovery phase of the inflation-unemployment cycle,

Accepted Answer

In the recovery phase, the economy is moving out of a recession and towards a period of expansion. As the economy grows, businesses begin to hire more workers, which reduces unemployment. At the same time, the demand for goods and services increases, but because the economy is still recovering, the supply may not be able to keep up. However, there is no significant upward pressure on prices yet, so inflation remains low. Therefore, both inflation and unemployment fall in the recovery phase.

Question 17

Consider the following statement: "President Carter expressed concern about reports of rising inflation but insisted the economy is on the right course.He pointed to recent reductions in unemployment as evidence that his economic policies are working." Identify the stage of the inflation-unemployment cycle.

Accepted Answer

The answer of Consider the following statement: "President Carter expressed...

Question 18

The recovery phase of the inflation-unemployment cycle is explained by

Accepted Answer

The recovery phase of the inflation-unemployment cycle is characterized by an increase in output and a decrease in unemployment. This is achieved through expansionary policies such as an increase in government spending, tax cuts, or a decrease in interest rates which lead to a rightward shift of the aggregate demand curve. This shift increases both price level and output level in the short run, eventually leading to a rightward shift of the short-run aggregate supply curve as producers increase production to meet the higher demand.

Question 19

Figure 16-7
 
-Refer to Figure 16-7.If the economy is at point 4, boosting aggregate demand through Expansionary policies will most likely lead to

Accepted Answer

Point 4 is in the contraction phase, which is characterized by low output and high unemployment. Boosting aggregate demand through expansionary policies would likely lead to a shift to the right in the aggregate demand curve, moving the economy towards point 3 in the recovery phase with higher output and lower unemployment.

Question 20

Figure 16-8
 
-Refer to Figure 16-8.The movement from point 4 to point 5 is consistent with which Segment in the diagram below?

Accepted Answer

The answer of Figure 16-8
 
-Refer to Figure 16-8.The movement...

Quiz 31: Macro Inflation and Unemployment

The recovery phase of the inflation-unemployment cycle emerges if

Since 1979 when inflation soared into the double-digit, the Federal Reserve's policies

In the United States, through most of the 1990s, the unemployment rate and the inflation rate generally fell.With which phase of the inflation-unemployment cycle does this conform to?

Consider the following statement: "President Nixon expressed satisfaction with last year's economic performance.He said that with inflation and unemployment heading down, the nation 'is on the right course'." Which of the following could have caused this phenomenon?

Figure 16-8 -Refer to Figure 16-8.The recessionary gap at point 4 was created

In the recovery phase of the inflation-unemployment cycle,

In early in 1994, the Federal Reserve shifted to a contractionary policy although the economy Was still in a recessionary gap left over from the 1990-1991 recession.Which of the Following best explains this move?

In the graph of the inflation-unemployment cycle, the variable on the horizontal axis is _ and the variable on the vertical axis is ___.

In the recovery phase of the inflation-unemployment cycle, a falling rate of inflation means That the price level is

Consider the following statement: "President Nixon expressed satisfaction with last year's economic performance.He said that with inflation and unemployment heading down, the nation 'is on the right course'." Identify the stage of the inflation-unemployment cycle.

Figure 16-8 -Refer to Figure 16-8.The movement from point 3 to point 4 is consistent with which Segment in the diagram below?

Figure 16-8 -Refer to Figure 16-8.The movement from point 4 to point 5 is consistent with which phase Of the inflation-unemployment cycle?

Which of the following statements is true?

Which of the following affect the values of inflation and unemployment? I.changes in government spending II.expectations about the price level III.changes in nominal wages IV.changes in money supply

In the recovery phase of the inflation-unemployment cycle,

The recovery phase of the inflation-unemployment cycle is explained by

Figure 16-7 -Refer to Figure 16-7.If the economy is at point 4, boosting aggregate demand through Expansionary policies will most likely lead to

Figure 16-8 -Refer to Figure 16-8.The movement from point 4 to point 5 is consistent with which Segment in the diagram below?