The Short-Run Phillips Curve Shows That

The short-run Phillips curve shows that

(A)there is a trade-off between inflation and unemployment

(B)high rates of unemployment are linked to high rates of interest

(C)high rates of inflation are linked to high rates of interest

(D)high rates of interest are consistent with increases in the money supply

(E)the natural rate of unemployment is unattainable

According to the short-run Phillips curve, a contractionary fiscal policy will result in

(A)a decrease in both unemployment and prices

(B)a decrease in inflation and an increase in unemployment

(C)a decrease in both wage rates and unemployment

(D)an increase in both wage rates and unemployment

(E)an increase in unemployment due to crowding out

An unanticipated decrease in aggregate demand will most likely cause the unemployment rate and the inflation rate to change in which of the following ways?

(A)Unemployment Rate = Increase ; Inflation Rate = Increase

(B)Unemployment Rate = Increase ; Inflation Rate = Decrease

(C)Unemployment Rate = Increase ; Inflation Rate = No Change

(D)Unemployment Rate = Decrease ; Inflation Rate = Increase

(E)Unemployment Rate = Decrease ; Inflation Rate = Decrease

A rightward shift of the short-run Phillips curve is most likely due to

(A)an increase in aggregate demand

(B)a decrease in aggregate demand

(C)a decrease in the expected rate of inflation

(D)an increase in the expected rate of inflation

(E)an increase in aggregate supply

The natural rate of unemployment can be defined as the

(A)unemployment rate consistent with accelerating inflation

(B)unemployment rate of the least-skilled workers

(C)economy’s long-run equilibrium rate of unemployment

(D)labor force participation rate plus the unemployment rate

(E)labor force participation rate minus the unemployment rate

Which of the following is true of the Phillips curve?

(A)It is vertical in the short run, but is upward sloping in the long run.

(B)It is upward sloping in the short run, but is downward sloping in the long run.

(C)It is downward sloping in the short run, but is vertical in the long run.

(D)It shows trade-offs between unemployment and inflation in the long run but not in the short run.

(E)It is upward sloping both in the short run and in the long run if inflation is anticipated correctly.

Which of the following is illustrated by the relationship depicted in the graph above?

(A)Aggregate demand curve

(B)Long-run Phillips curve

(C)Short-run Phillips curve

(D)Long-run aggregate supply curve

(E)Short-run aggregate supply curve

Which of the following could cause a movement along a country’s short-run Phillips curve toward higher unemployment and lower inflation?

(A)A significant reduction in energy prices

(B)A recession in the economies of the nation’s major trading partners

(C)A decrease in savings by the country’s consumers

(D)A movement of the economy from the recovery phase to the expansionary phase of the business cycle

(E)An improvement in technology

According to the short-run Phillips curve, lower inflation rates are associated with

(A)higher unemployment rates

(B)higher government spending

(C)larger budget deficits

(D)greater labor-force participation rates

(E)smaller labor-force participation rates

According to the short-run Phillips curve, a decrease in unemployment is expected to be accompanied by

(A)higher labor-force participation

(B)an increase in inflation

(C)an increase in the productivity of capital

(D)an increase in the government deficit

(E)a decrease in real gross domestic product

Which of the following is true of the long-run Phillips curve?

(A)It shows there is a trade-off between unemployment and inflation.

(B)It is positively sloped when the inflation rate exceeds the unemployment rate.

(C)It is vertical at the natural rate of unemployment.

(D)It shifts to the right if aggregate demand increases.

(E)It is created by an adverse supply shock.

A short-run Phillips curve shows an inverse relationship between

(A)interest rates and borrowing

(B)inflation and unemployment

(C)income and consumption

(D)prices and quantity demanded

(E)inputs and outputs

An increase in aggregate demand will cause which of the following?

(A)A movement along a given short-run Phillips curve

(B)The long-run Phillips curve to become horizontal

(C)The short-run Phillips curve to shift to the left

(D)The long-run Phillips curve to shift to the right

(E)The long-run Phillips curve to shift to the left

According to the short-run Phillips Curve, there is a trade-off between

(A)interest rates and inflation

(B)the growth of the money supply and interest rates

(C)unemployment and economic growth

(D)inflation and unemployment

(E)economic growth and interest rates

According to the long-run Phillips curve, which of the following is true?

(A)Unemployment increases with an increase in inflation.

(B)Unemployment decreases with an increase in inflation.

(C)Increased automation will lead to lower levels of structural unemployment in the long run.

(D)Changes in the composition of the overall demand for labor tend to be deflationary in the long run.

(E)The natural rate of unemployment is independent of monetary and fiscal policy changes that affect aggregate demand.