Question 1

The long-run Phillips curve shows the relationship between the ________ and the ________ when there is no ________ unemployment.

Accepted Answer

The long-run Phillips curve illustrates the relationship between the inflation rate and the unemployment rate when there is no cyclical unemployment, indicating that the economy is at its natural rate of unemployment.

Question 2

If the short-run Phillips curve shifts rightward, what happens to the trade off between inflation and unemployment?
 If the short-run Phillips curve shifts leftward, what happens to the trade off between inflation and unemployment?

Accepted Answer

The answer of If the short-run Phillips curve shifts rightward,...

Question 3

In the United States during the late 1960s, the unemployment rate fell from previous years, and the inflation rate began to rise from previous years.This set of events is best described by saying that the

Accepted Answer

The economy moved to a higher point on its short-run Phillips curve, indicating a trade-off between lower unemployment and higher inflation, without a shift in the curve itself.

Question 4

In the United States during the late 1990s, the unemployment rate fell from previous years and the inflation rate was lower than in previous years.This set of events is best described by saying that the

Accepted Answer

The relationship between unemployment and inflation is depicted by the Phillips curve. A lower unemployment rate and lower inflation rate indicate that the economy moved to a lower point on the short-run Phillips curve, and this is represented by a downward shift of the curve. Thus, choice B is the correct answer. The other options do not accurately represent the given scenario.

Question 5

The figure above shows some Phillips curves for an economy.
-Along the short-run Phillips curve SRPC₂ the natural unemployment rate is

Accepted Answer

The short-run Phillips curve SRPC₂ intersects with the long-run Phillips curve (LRPC) at a point where inflation is stable at zero. This point indicates the natural rate of unemployment, which is 4 percent according to the figure. Therefore, the answer is C.

Question 6

"The short-run Phillips curve is vertical at the natural unemployment rate." Is the previous statement correct or incorrect?

Accepted Answer

The answer of "The short-run Phillips curve is vertical at...

Question 7

Along a short-run Phillips curve when the inflation rate rises,

Accepted Answer

In the short-run Phillips curve, an increase in the inflation rate typically leads to a decrease in the real wage rate, which can result in more labor being hired as firms take advantage of lower real labor costs.

Question 8

In the United States during the 1970s, the unemployment rate rose from previous years, and the inflation rate increased rapidly.This set of events is best described by saying that the

Accepted Answer

The rise in both unemployment and inflation during the 1970s suggests that the short-run Phillips curve shifted upward. This means that the economy has experienced a higher level of inflation for any given level of unemployment. This was due to a combination of factors, including high oil prices, inconsistent monetary policy, and supply shocks.

Question 9

In 1981 Fed policy created a severe recession because the Fed

Accepted Answer

The correct answer is B because the Fed's surprise reduction in the inflation rate in 1981 involved a sharp increase in interest rates and a contractionary monetary policy, leading to a severe recession. The Fed's goal was to curb the high inflation rate that had been plaguing the economy for years, but the abruptness of the policy change resulted in significant economic costs.

Question 10

The figure above shows some Phillips curves for an economy.
-In the figure above, the shift from the short-run Phillips curve SRPC₀ and the long-run Phillips curve LRPC₀ to the short-run Phillips curve SRPC₁ and the long-run Phillips curve LRPC₁ is the result of ________ in the expected inflation rate and ________ in the natural unemployment rate.

Accepted Answer

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

Question 11

The long-run Phillips curve represents the relationship between the inflation rate and the unemployment rate when there is no ________ unemployment.

Accepted Answer

In the long run, the Phillips curve is vertical at the natural rate of unemployment, which includes structural, frictional, and seasonal unemployment, but not cyclical unemployment. Cyclical unemployment is associated with short-term economic fluctuations and is not present in the long-run equilibrium.

Question 12

Along the short-run Phillips curve SRPC₀ the natural unemployment rate is

Accepted Answer

The answer of Along the short-run Phillips curve SRPC₀ the...

Question 13

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

Accepted Answer

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

Question 14

Moving along a short-run Phillips curve, a reduction in the unemployment rate is achieved by

Accepted Answer

Moving along the short-run Phillips curve involves a trade-off between inflation and unemployment. To reduce unemployment, the economy needs to increase the inflation rate, which is achieved by stimulating aggregate demand through expansionary monetary or fiscal policy. Therefore, option D is the best choice as the others would have adverse effects on the economy.

Question 15

"The short-run Phillips curve shifts leftward when the inflation rate rises." Is the previous statement correct or incorrect?

Accepted Answer

The answer of "The short-run Phillips curve shifts leftward when...

Question 16

"The short-run Phillips curve shows the tradeoff between real GDP and inflation." Is the previous statement correct or incorrect?
 Briefly explain you answer.

Accepted Answer

The answer of "The short-run Phillips curve shows the tradeoff...

Question 17

What does the short-run Phillips curve indicate about the tradeoff between inflation and unemployment?

Accepted Answer

The answer of What does the short-run Phillips curve indicate...

Question 18

Which of the following could create a movement along the short-run Phillips curve so that the unemployment rate temporarily falls below the natural unemployment rate ?

Accepted Answer

An increase in aggregate demand and a sticky wage rate could create a movement along the short-run Phillips curve so that the unemployment rate temporarily falls below the natural unemployment rate. When aggregate demand increases, firms increase production and hire more employees, leading to a lower unemployment rate. However, if wages are sticky, they may not adjust immediately to the increased demand, resulting in temporarily lower unemployment.

Question 19

The figure above shows some Phillips curves for an economy.
-In the figure above, the shift from the short-run Phillips curve SRPC₀ and the long-run Phillips curve LRPC₀ to the short-run Phillips curve SRPC₂ and the long-run Phillips curve LRPC₂ is the result of ________ in the expected inflation rate and ________ in the natural unemployment rate.

Accepted Answer

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

Question 20

Define the short-run Phillips curve.

Accepted Answer

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

Quiz 15: The Short-Run Policy Tradeoff

The long-run Phillips curve shows the relationship between the and the when there is no unemployment.

If the short-run Phillips curve shifts rightward, what happens to the trade off between inflation and unemployment? If the short-run Phillips curve shifts leftward, what happens to the trade off between inflation and unemployment?

In the United States during the late 1960s, the unemployment rate fell from previous years, and the inflation rate began to rise from previous years.This set of events is best described by saying that the

In the United States during the late 1990s, the unemployment rate fell from previous years and the inflation rate was lower than in previous years.This set of events is best described by saying that the

The figure above shows some Phillips curves for an economy. -Along the short-run Phillips curve SRPC₂ the natural unemployment rate is

"The short-run Phillips curve is vertical at the natural unemployment rate." Is the previous statement correct or incorrect?

Along a short-run Phillips curve when the inflation rate rises,

In the United States during the 1970s, the unemployment rate rose from previous years, and the inflation rate increased rapidly.This set of events is best described by saying that the

In 1981 Fed policy created a severe recession because the Fed

The long-run Phillips curve represents the relationship between the inflation rate and the unemployment rate when there is no ________ unemployment.

Along the short-run Phillips curve SRPC₀ the natural unemployment rate is

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

Moving along a short-run Phillips curve, a reduction in the unemployment rate is achieved by

"The short-run Phillips curve shifts leftward when the inflation rate rises." Is the previous statement correct or incorrect?

"The short-run Phillips curve shows the tradeoff between real GDP and inflation." Is the previous statement correct or incorrect? Briefly explain you answer.

What does the short-run Phillips curve indicate about the tradeoff between inflation and unemployment?

Which of the following could create a movement along the short-run Phillips curve so that the unemployment rate temporarily falls below the natural unemployment rate ?

Define the short-run Phillips curve.