Question :
14.5 The Long-Run Aggregate Supply Curve, Potential Output, and the : 1381209
14.5 The Long-Run Aggregate Supply Curve, Potential Output, and the Natural Rate of Unemployment
1) In the long run, the Phillips curve will be vertical at the natural rate of unemployment if
A) the long-run aggregate demand curve is vertical at potential output.
B) the long-run aggregate demand curve is horizontal at the natural rate of inflation.
C) the long-run aggregate supply curve is vertical at potential output.
D) the long-run supply curve is horizontal at the natural rate of inflation.
2) If the Phillips curve is vertical in the long run, then
A) there is a trade-off between inflation and unemployment in the long run.
B) the inflation rate will always be zero in the long run.
C) the unemployment rate will be zero in the long run.
D) there is no trade-off between inflation and unemployment in the long run.
Refer to the information provided in Figure 14.8 below to answer the questions that follow.
Figure 14.8
3) Refer to Figure 14.8. Expected inflation at Point A ________ expected inflation at Point C.
A) is greater than
B) is less than
C) equals
D) cannot be determined from the figure
4) Refer to Figure 14.8. Expected inflation at Point B equals
A) 4%.
B) 5%.
C) 6%.
D) cannot be determined from the figure
5) Refer to Figure 14.8. Along SRPC2, expected inflation equals
A) 4%.
B) 5%.
C) 6%.
D) cannot be determined from the figure
6) Refer to Figure 14.8. Along SRPC3, expected inflation equals
A) 4%.
B) 5%.
C) 6%.
D) cannot be determined from the figure
7) If the measured unemployment rate is 8% and the natural unemployment rate is 3%, then
A) frictional unemployment is 5%.
B) cyclical unemployment is 5%.
C) frictional unemployment is 11%.
D) structural unemployment is 11%.
8) Economists who argue that the AS curve is vertical in the long run at potential GDP also argue that the Phillips curve in the long run is
A) vertical at the natural rate of unemployment.
B) upward sloping.
C) downward sloping.
D) horizontal at the natural rate of inflation.
9) The measured unemployment rate can be pushed below the natural rate, but
A) only in the long run and only if the price level is constant.
B) only in the long run and not without inflation.
C) only in the short run and only if the price level is constant.
D) only in the short run and not without inflation.
10) If the economy is at potential output, actual inflation
A) is greater than expected inflation.
B) equals expected inflation.
C) is less than expected inflation.
D) equals the natural rate of unemployment.
11) Only when the unemployment rate is equal to the nonaccelerating inflation rate of unemployment (NAIRU) is the price level changing at a constant rate.
12) A vertical aggregate supply curve implies a vertical Phillips curve.
13) If the unemployment rate rises above the natural rate of unemployment in the short run, the inflation rate will rise.
14) If unemployment is below the natural rate of unemployment, then output is below potential output.
15) The natural rate of unemployment is unemployment that occurs as a normal part of the functioning of the economy.
