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Exam 9: Inflation: Its Causes and Cures

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Question 31

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The inflation rate,actual employment rate and natural rate of unemployment from 1980 to 1996 indicate that

A) the inflation rate fell when the actual unemployment rate exceeded the natural unemployment rate.
B) the inflation rate increased when the natural rate of unemployment exceeded the actual unemployment rate.
C) during most of this period the inflation rate was falling and the actual unemployment rate exceeded the natural rate of unemployment.
D) All of the above.

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Question 32

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Low inflation rate between 2007 and 2009 was the result of

A) weak aggregate demand and declining oil prices.
B) weak aggregate supply and rising oil prices.
C) rising oil prices and increasing exports.
D) increasing exports and strong dollar.

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Question 33

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In ________ there were adverse supply shocks to the U.S.economy.

Which of the following will shift the short-run Phillips Curve?

The aggravation of inflation and unemployment as a result of a supply shock

Stagflation may be explained by

Given an adverse supply shock,an "extinguishing policy response" will

In the short-run,the impact of an adverse supply shock is to

The natural unemployment rate fell in the 1990s in part because of ________.

For real output to remain constant

The "long-run Phillips Curve" is the set of points for which

Crop failures generally produce ________ supply shocks in which the price level rises and then ________.

If x is the growth rate of nominal GDP,p is the inflation rate,and y is the growth rate of real output,then

Suppose we are initially at a long-run SP/LP equilibrium with x = p = pe = 4.Then an adverse supply shock adds 3 percentage points to the inflation necessary to produce each level of output.An "accommodating" policy response ________ the level of nominal GDP growth so that inflation is ________ percent while (Y/YN) ________.

If price controls are initiated,we would expect that

Preeminent among the causes of supply inflation in recent decades is

Continuous inflation in the long run requires repeated ________ shifts of the AD curve caused by a continuous increase in the ________.

Suppose expected inflation is fixed at zero and we are on the SP curve with p = 2 and Y = 104.If nominal GDP rises (again) by 6 percent

Figure 8-6 -In Figure 8-6 above,an expansionary monetary policy with no change in inflationary expectations takes us along path

An adverse supply shock will shift the short-run Phillips Curve