Question : 21) The short-run Phillips curve shows only a short-run tradeoff : 1240598

 

21) The short-run Phillips curve shows only a short-run tradeoff between the unemployment rate and the inflation rate because in the long run the

A) natural unemployment rate increases.

B) expected inflation rate increases.

C) unemployment rate returns to the natural unemployment rate and so there is no long-run tradeoff between the inflation rate and the unemployment rate.

D) inflation rate returns to the natural inflation rate and so there is no long-run tradeoff between the inflation rate and the unemployment rate.

E) inflation rate returns to the natural inflation rate and the unemployment rate returns to the natural unemployment rate.

 

22) The short-run Phillips curve is ________, and the long-run Phillips curve is ________.

A) upward sloping; vertical

B) vertical; upward sloping

C) vertical; downward sloping

D) downward sloping; vertical

E) downward sloping; downward sloping

 

23) The short-run Phillips curve shows ________ between the unemployment rate and the inflation rate, and the long-run Phillips curve shows ________ between the unemployment rate and the inflation rate.

A) a negative relationship; no relationship

B) a negative relationship; a positive relationship

C) no relationship; no relationship

D) no relationship; a negative relationship

E) a positive relationship; a negative relationship

24) The short-run Phillips curve is downward sloping because

A) the expected inflation rate is zero in the short run.

B) the unemployment rate can be above or below the natural unemployment rate.

C) reducing the unemployment rate will reduce the inflation rate in the short run.

D) the economy always returns to full employment.

E) in the long run, the expected inflation rate equals the actual inflation rate.

 

25) In the long run, there is

A) a tradeoff between unemployment and inflation.

B) a tradeoff between unemployment and real GDP.

C) no tradeoff between fiscal policy and monetary policy.

D) no tradeoff between unemployment and inflation.

E) a tradeoff between unemployment and natural unemployment.

26) In the figure above, the natural unemployment rate is

A) 0 percent.

B) 2 percent.

C) 4 percent.

D) 6 percent.

E) 8 percent.

 

27) In the figure above, the expected inflation rate is

A) 0 percent.

B) 2 percent.

C) 4 percent.

D) 6 percent.

E) 8 percent.

28) In the figure above, the natural unemployment rate is

A) 0 percent.

B) 2 percent.

C) 4 percent.

D) 6 percent.

E) 8 percent.

 

29) In the figure above, the expected inflation rate is

A) 0 percent.

B) 2 percent.

C) 4 percent.

D) 6 percent.

E) 8 percent.

30) Comparing the short-run Phillips curve and the long-run Phillips curve, we see that there is

A) a tradeoff in both curves.

B) only a long-run tradeoff between inflation and unemployment but not a short-run tradeoff.

C) no tradeoff in either curve.

D) only a short-run tradeoff between inflation and unemployment but not a long-run tradeoff.

E) no relationship between the two curves.

 

31) The expected inflation rate is the inflation rate that people forecast and use to help set

A) the money wage rate.

B) the real wage rate.

C) the natural rate of unemployment.

D) real GDP.

E) the price level.

 

32) At full employment, the expected inflation rate is

A) equal to the inflation rate.

B) higher than the inflation rate.

C) lower than the inflation rate.

D) unrelated to the inflation rate.

E) unknown.

33) In order to keep the real wage rate constant, the

A) money wage rate must increase by the same amount as the inflation rate.

B) inflation rate must be exactly one half of the expected inflation rate.

C) nominal interest rate must be equal to the inflation rate.

D) money wage rate must increase when the price level falls.

E) money wage rate must decrease by the same amount as the inflation rate.