21) Burger King is paying $9 an hour to its workers. If the expected inflation rate equals the actual inflation rate and both are 10 percent a year, then to keep the real wage rate constant in a year the money wage rate must
A) rise to $9.90 an hour.
B) fall to $8.10 an hour.
C) stay at $9.00 an hour.
D) rise to $10.00 an hour.
E) rise to $9.45 an hour.
22) 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.
23) 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
24) 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
25) 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.
26) 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.
27) In the figure above, the natural unemployment rate is
A) 0 percent.
B) 2 percent.
C) 4 percent.
D) 6 percent.
E) 8 percent.
28) In the figure above, the expected inflation rate is
A) 0 percent.
B) 2 percent.
C) 4 percent.
D) 6 percent.
E) 8 percent.
29) In the figure above, the natural unemployment rate is
A) 0 percent.
B) 2 percent.
C) 4 percent.
D) 6 percent.
E) 8 percent.
30) In the figure above, the expected inflation rate is
A) 0 percent.
B) 2 percent.
C) 4 percent.
D) 6 percent.
E) 8 percent.
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