Question 1

What does the Phillips curve represent?

Accepted Answer

The answer of What does the Phillips curve represent?...

Question 2

A country with a steep Phillips curve experiences a smaller increase in the rate of inflation than a country with a relatively flat Phillips curve,assuming the size of the positive demand shock in each country is the same.

Accepted Answer

A steep Phillips curve indicates a strong inverse relationship between unemployment and inflation, suggesting that a given demand shock leads to a smaller increase in inflation and a larger decrease in unemployment compared to a flat Phillips curve, where the same demand shock would result in a larger increase in inflation and a smaller decrease in unemployment.

Question 3

If output is above potential,so that  
t is positive,the change in the inflation rate will be negative,so inflation will fall over time.

Accepted Answer

The answer of If output is above potential,so that ...

Question 4

-The table below displays the United States' potential and actual output for six select months between 1960 and 2009.In which month does the economy have the largest expansionary gap? Largest recessionary gap?
Table 9.1: Actual and Potential Output,in billions $s

Accepted Answer

The answer of 
-The table below displays the United States'...

Question 5

-Figure 9.6 below shows the output gap for the years 1990-2010.Using the Phillips curve and Okun's law,discuss the impacts on inflation and unemployment for the years 1997-2000 and 2008-2010.From this analysis,what is the relationship between unemployment and inflation?

Accepted Answer

The answer of 
-Figure 9.6 below shows the output gap...

Question 6

Suppose an economy exhibits a large unexpected decrease in productivity growth that lasts for a decade.However,monetary policymakers are slow to recognize that the change is to potential,not current,output and interpret the decrease in output as a recession that leads current output to fall below potential output.In this scenario,policymakers believe that recessionary pressures are building and incorrectly respond by increasing interest rates,sending the economy into a recessionary gap.

Accepted Answer

If policymakers incorrectly interpret a decrease in productivity growth as a recession and respond by increasing interest rates, it would likely exacerbate the recessionary pressures, not create a recessionary gap. A recessionary gap occurs when actual output is below potential output, and raising interest rates would typically reduce demand further, worsening the gap.

Question 7

What three premises does the short-run model operate under?

Accepted Answer

The answer of What three premises does the short-run model...

Question 8

Suppose an economy's natural rate of unemployment is 5 percent.If the unemployment rate is 7 percent,according to Okun's law,  
is 4 percent.

Accepted Answer

Okun's law states that for every 1 percent increase in the unemployment rate above the natural rate, there will be a 2 percent decrease in real GDP. Therefore, if the unemployment rate is 7 percent (2 percent above the natural rate), there will be a 4 percent decrease in real GDP, not a 4 percent decrease in the unemployment rate.

Question 9

When current output rises above potential output,we hire fewer workers,which reduces the costs of production.The change in inflation will be negative.

Accepted Answer

When current output rises above potential output, it indicates that the economy is operating at a level that is not sustainable in the long run. As a result, we might need to hire more workers to meet the increased demand, which would increase the costs of production. Inflation may increase as demand outstrips supply, leading to higher prices. Therefore, the change in inflation will be positive rather than negative.

Question 10

An increase in planned investment expenditures is a short-term economic "shock."

Accepted Answer

An increase in planned investment expenditures is typically considered a component of fiscal or monetary policy adjustments rather than a short-term economic shock. Economic shocks are usually unexpected events that affect the economy suddenly and significantly, such as natural disasters or sudden financial crises, whereas planned investment expenditures are deliberate economic strategies.

Question 11

If  
the macroeconomy is in a recession.

Accepted Answer

The code "11ea895d_4d75_a261_8397_7b666a6c54d4_TB4305_11" is not related to the question or the macroeconomy. Therefore, the answer is based on the statement provided which states that the macroeconomy is in a recession.

Question 12

Defining u as the unemployment rate and u¯ as the natural rate of unemployment,Okun's law is given by  
.

Accepted Answer

The answer of Defining u as the unemployment rate and...

Question 13

What does Okun's law state?

Accepted Answer

The answer of What does Okun's law state?...

Question 14

How is a recession "officially'' determined?

Accepted Answer

The answer of How is a recession "officially'' determined?...

Question 15

If  
,the macroeconomy is producing at its potential level of output.

Accepted Answer

The answer of If  
,the macroeconomy is producing at...

Question 16

A decline in long-term productivity implies that an economy requires more resources to produce goods;therefore,as costs of production rise,we should see an acceleration in inflation.

Accepted Answer

An increase in costs of production due to a decline in long-term productivity leads to a decrease in the supply of goods, which results in an increase in prices (inflation) as demand remains constant or increases.

Quiz 9: An Introduction to the Short Run

What does the Phillips curve represent?

A country with a steep Phillips curve experiences a smaller increase in the rate of inflation than a country with a relatively flat Phillips curve,assuming the size of the positive demand shock in each country is the same.

If output is above potential,so that t is positive,the change in the inflation rate will be negative,so inflation will fall over time.

-The table below displays the United States' potential and actual output for six select months between 1960 and 2009.In which month does the economy have the largest expansionary gap? Largest recessionary gap? Table 9.1: Actual and Potential Output,in billions $s

-Figure 9.6 below shows the output gap for the years 1990-2010.Using the Phillips curve and Okun's law,discuss the impacts on inflation and unemployment for the years 1997-2000 and 2008-2010.From this analysis,what is the relationship between unemployment and inflation?

What three premises does the short-run model operate under?

Suppose an economy's natural rate of unemployment is 5 percent.If the unemployment rate is 7 percent,according to Okun's law, is 4 percent.

When current output rises above potential output,we hire fewer workers,which reduces the costs of production.The change in inflation will be negative.

An increase in planned investment expenditures is a short-term economic "shock."

If the macroeconomy is in a recession.

Defining u as the unemployment rate and u¯ as the natural rate of unemployment,Okun's law is given by .

What does Okun's law state?

How is a recession "officially'' determined?

If ,the macroeconomy is producing at its potential level of output.

A decline in long-term productivity implies that an economy requires more resources to produce goods;therefore,as costs of production rise,we should see an acceleration in inflation.