Question : 15.2   Short-Run and Long-Run Phillips Curves 1) The curve that shows : 1240621

15.2   Short-Run and Long-Run Phillips Curves

1) The curve that shows the relationship between inflation and unemployment when the economy is at full employment is the

A) short-run Phillips curve.

B) long-run Phillips curve.

C) long-run Okun’s curve.

D) aggregate demand curve.

E) aggregate supply curve.

2) In the long run, the unemployment rate

A) is zero.

B) is equal to the natural unemployment rate.

C) can take on any value.

D) is equal to the expected unemployment rate.

E) must be equal to the expected inflation rate.

3) The long-run Phillips curve shows the relationship between

A) the inflation rate and the unemployment rate.

B) real GDP and potential GDP.

C) the nominal interest rate and real interest rate.

D) the inflation rate and the natural unemployment rate.

E) real GDP and the natural unemployment rate.

4) If the economy is at full employment, then the inflation rate

A) exceeds the expected inflation rate.

B) is less than the expected inflation rate.

C) can be anywhere on a short-run Phillips curve.

D) is equal to the expected inflation rate.

E) is equal to zero.

5) At full employment,

A) real GDP exceeds potential GDP.

B) the unemployment rate is equal to the natural unemployment rate.

C) the unemployment rate is zero.

D) the inflation rate is zero.

E) the inflation rate must equal the natural unemployment rate.

6) The long-run Phillips curve shows the relationship between the inflation rate and the unemployment rate when the economy is

A) at full employment.

B) in expansion.

C) in recession.

D) at full inflation.

E) away from potential GDP.

7) The long-run Phillips curve shows the relationship between ________ and ________ when the economy is at full employment.

A) the natural inflation rate; the unemployment rate

B) the unemployment rate; real GDP

C) potential GDP; the natural unemployment rate

D) the inflation rate; the unemployment rate

E) the inflation rate; the nominal interest rate

8) The long-run Phillips curve shows the relationship between

A) inflation and unemployment at full employment.

B) aggregate demand and aggregate supply at full employment.

C) aggregate demand and interest rates at full employment.

D) inflation and interest rates at full employment.

E) the price level and real GDP when the economy is not at full employment.

9) The long-run Phillips curve is a vertical line because

A) the unemployment rate decreases when the inflation rate increases.

B) there is no relationship between the natural unemployment rate and the inflation rate.

C) the natural unemployment rate only depends on the inflation rate.

D) real GDP does not depend on the unemployment rate.

E) in the long run, the natural unemployment rate increases when inflation increases.

10) The lack of a long-run tradeoff between the unemployment rate and the inflation rate means the long-run Phillips curve is

A) upward sloping.

B) horizontal.

C) vertical.

D) downward sloping.

E) U-shaped, with higher inflation initially decreasing unemployment and then increasing it back to the natural unemployment rate.