Question : 6) In the United States during the 1970s, the unemployment : 1240606

6) In the United States during the 1970s, the unemployment rate rose from previous years, and the inflation rate increased rapidly. This set of events is best described by saying that the

A) economy moved to a lower point on its short-run Phillips curve but the short-run Phillips curve did not shift.

B) short-run Phillips curve shifted downward.

C) short-run Phillips curve shifted upward.

D) economy moved to a higher point on its short-run Phillips curve but the short-run Phillips curve did not shift.

E) the long-run Phillips curve shifted leftward.

7) In the United States during the late 1990s, the unemployment rate fell from previous years and the inflation rate was lower than in previous years. This set of events is best described by saying that the

A) economy moved to a lower point on its short-run Phillips curve but the short-run Phillips curve did not shift.

B) short-run Phillips curve shifted downward.

C) short-run Phillips curve shifted upward.

D) economy moved to a higher point on its short-run Phillips curve but the short-run Phillips curve did not shift.

E) long-run Phillips curve shifted rightward.

8) Which of the following could create a movement along the short-run Phillips curve so that the unemployment rate temporarily falls below the natural unemployment rate?

A) an increase in aggregate demand and a sticky wage rate

B) a decrease in aggregate demand and a sticky wage rate

C) an increase in aggregate demand and a quickly responsive wage rate

D) a decrease in aggregate demand and a quickly responsive wage rate

E) an increase in aggregate supply and a sticky wage rate

9) Along a given ________ Phillips curve, a lower unemployment rate can be achieved only by paying the cost of a ________ inflation rate, and a lower inflation rate can be achieved only by paying the cost of a ________ unemployment rate. 

A) short-run; higher; higher

B) short-run; higher; lower

C) short-run; lower; higher

D) long-run; higher; higher

E) long-run; higher; lower

10) If ________ GDP exceeds ________  GDP, employment exceeds its full-employment level and the unemployment rate is ________ the natural unemployment rate.

A) real; potential; below

B) real; potential; above

C) nominal; potential; below

D) nominal; potential; above

E) real; nominal; below

11) If real GDP is ________ than potential GDP, employment is ________ than its full-employment level and the unemployment rate rises ________ the natural unemployment rate. 

A) less; more; above

B) more; more; above

C) less; less; above

D) less; less; below

E) more; less; above

12) The natural rate hypothesis asserts that in the ________, the money wage rate is fixed and the ________ in the inflation rate brings a(n) ________ in the unemployment rate.

A) short-run; decrease; increase

B) short-run; decrease; decrease

C) long-run; increase; decrease

D) short-run; increase; decrease

E) short-run; increase; increase

13) If the inflation that results from targeting unemployment becomes unacceptably high, low inflation can be restored. Lower inflation can be obtained by ________ the growth rate of aggregate demand, by ________ money growth, and by________ interest rates.

A) lowering; slowing; lowering

B) lowering; accelerating; raising

C) lowering; accelerating; lowering

D) raising; slowing; raising

E) lowering; slowing; raising

14) If the Fed can ________ inflation expectations, it might achieve ________ inflation without ________ the unemployment rate. 

A) raise; higher; lowering

B) lower; lower; lowering

C) lower; lower; raising

D) lower; higher; lowering

E) raise; lower; raising

15) If the Fed decides that it wants to lower the unemployment rate, it ________ the growth rate of aggregate demand by ________ the growth rate of money and ________ interest rates. 

A) reduces; accelerates, lowering

B) accelerates; reducing; lowering

C) accelerates; reducing; raising

D) accelerates; accelerating; lowering

E) accelerates; accelerating; raising