Question : 34) Based the above table, if the current price level : 1240599

34) Based on the above table, if the current price level is 100 and the natural unemployment rate is 5 percent, what is the expected inflation rate?

A) 2 percent

B) 3 percent

C) 5 percent

D) 8 percent

E) 12 percent

35) Based on the above table, if the current price level is 100 and the unemployment rate is 4 percent, then the

A) inflation rate is 8 percent.

B) expected inflation rate is 8 percent.

C) inflation rate is 2.8 percent.

D) expected inflation rate is 2.8 percent.

E) inflation rate is 108 percent.

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

A) a decrease in the unemployment rate.

B) an increase in the unemployment rate.

C) no change in the unemployment rate.

D) a decrease in the natural unemployment rate.

E) an increase in the natural unemployment rate.

37) The natural rate hypothesis asserts that

A) when prices change, the inflation rate changes temporarily and then returns to its natural rate.

B) changes in the unemployment rate are natural and long-lasting.

C) price changes occur at a natural rate, near a 6 percent average inflation rate.

D) changes in the unemployment rate from changes in the inflation rate are temporary.

E) changes in the natural unemployment rate are only temporary.

38) 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 ________.

A) rises, decreases; returns to the natural unemployment rate

B) rises, decreases; decreases

C) falls, decreases; decreases

D) falls, decreases; returns to the natural unemployment rate

E) falls, increases; decreases

39) The natural rate hypothesis states that when the inflation rate

A) increases, the unemployment rate will decrease permanently.

B) decreases, the inflation rate will decrease permanently.

C) changes, the unemployment rate changes temporarily and eventually returns to the natural unemployment rate.

D) changes, the change is only temporary, and eventually the inflation rate returns to the natural inflation rate.

E) increases, the natural unemployment rate increases.

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

A) an upward movement along the short-run Phillips curve.

B) a downward movement along the short-run Phillips curve.

C) an upward shift of the short-run Phillips curve.

D) a downward shift of the short-run Phillips curve.

E) no change at all in the short-run Phillips curve.

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

A) an upward movement along the short-run Phillips curve.

B) a downward movement along the short-run Phillips curve.

C) an upward shift of the short-run Phillips curve.

D) a downward shift of the short-run Phillips curve.

E) no change at all in the short-run Phillips curve.

42) The natural rate hypothesis concludes that when the inflation rate unexpectedly increases, the unemployment rate ________. But when the higher inflation rate becomes the expected inflation rate, the unemployment rate then ________ until it reaches the ________ unemployment rate.

A) decreases; increases; maximum

B) increases; decreases; minimum

C) decreases; increases; natural

D) decreases; decreases; natural

E) increases; decreases; natural

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

A) have lower unemployment but then return to its natural rate with an inflation rate of 4 percent.

B) stay at the 4 percent inflation rate and the natural unemployment rate will fall.

C) not see any lower unemployment, even temporarily, just higher inflation.

D) eventually return to its natural rate of 2 percent inflation and a new lower unemployment rate.

E) eventually return to its natural rate of 2 percent inflation and its natural unemployment rate of 5 percent.