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.Management Sciences
Category: The Phillips Curve
Along a short-run Phillips curve, ?
A. a higher rate of inflation is associated with a lower unemployment rate
B. a higher rate of growth in output is associated with a lower unemployment rate
C. a higher rate of inflation is associated with a higher unemployment rate
D. a higher rate of growth in output is associated with a higher unemployment rate.
If the sacrifice ratio is five, a reduction in inflation from 7 percent to 3 percent would require ?
A. a reduction in output of 20 percent
B. a reduction in output of 5percent
C. a reduction in output of 15 percent
D. a reduction in output of 35 percent
When actual inflation exceeds expected inflation ?
A. Unemployment is equal to the natural rate of unemployment
B. People will reduce their expectations of inflation in the future
C. Unemployment is greater than the natural rate of unemployment
D. Unemployment is less than the natural rate of unemployment
The original Phillips curve illustrates ?
A. the trade-off between inflation and unemployment
B. The trade-off between output and unemployment
C. The positive relationship between output and unemployment
D. The positive relationship between inflation and unemployment
If people have rational expectations a monetary policy contraction that is announced and is credible could ?
A. reduce inflation with little or no increase in unemployment
B. Increase inflation but would decrease unemployment by an unusually large amount
C. increase inflation with little or no decrease in unemployment
D. reduce inflation but it would increase unemployment by an unusually large amount
If, in the long run, people adjust their price expectations so that all prices and incomes move proportionately to an increase in the price level then the long-run Phillips curve ?
A. is vertical
B. is negatively sloped
C. has a slope that is determined by how fast people adjust their price expectations
D. is positively sloped
The misery index Which some commentators suggest measures the health of the economy, is ?
A. The sum of the growth rate of output and the inflation rate
B. The sum of the natural rate of unemployment and the actual rate of unemployment
C. The sum of the inflation rate and the central bank’s refinancing rate
D. The sum of the unemployment rate and the inflation rate
The Phillips curve is an extension of the model of aggregate supply and aggregate demand because, in the short run, an increase in aggregate demand increase price and ?
A. decreases unemployment
B. decrease growth
C. increases unemployment
D. decreases inflation
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