Quiz 7

1. will permanently decrease the sum "μ + z" in the Phillips curve equation.
2. will permanently decrease the natural rate of unemployment.
3. will permanently decrease the markup in the Phillips curve equation.
4. all of the above
5. none of the above

1. the expected inflation rate is equal to last year's inflation rate.
2. the markup over labor costs is zero.
3. a lower rate of unemployment causes an increasing rate of inflation.
4. the inflation would be zero.
5. none of the above

1. Solow and Friedman
2. Friedman and Phelps
3. Samuelson and Solow
4. Friedman and Phillips

1. results in deflation.
2. attempts to maintain output below the natural level of output.
3. both a and b
4. results in steadily rising inflation.

1. the natural rate of unemployment will increase.
2. nominal wages will become more sensitive to changes in unemployment.
3. the natural rate of unemployment will decrease.
4. a reduction in the unemployment rate will now have a smaller effect on inflation.

1. the unemployment rate and the change in the rate of inflation
2. the change in the unemployment rate and the change in the rate of inflation
3. the inverse of the unemployment rate and the rate of inflation
4. the unemployment rate and the rate of inflation
5. the rate of inflation and the change in the unemployment rate

1. lower unemployment rates will be associated with higher inflation rates.
2. expected price level for a given year will equal the previous year's actual price level.
3. the current inflation rate will not depend heavily on past inflation.
4. all of the above
5. none of the above

1. the unemployment rate to be relatively high.
2. the change in the inflation rate to be less sensitive to the unemployment rate.
3. the inflation rate to be relatively low.
4. the unemployment rate to be relatively low.
5. none of the above

1. contractionary monetary policy.
2. a reduction in benefits paid to workers by firms.
3. contractionary fiscal policy.
4. all of the above
5. none of the above

1. 1973
2. 1955
3. 1991
4. 1933
5. 1987

1. The rate of inflation will tend to increase.
2. The rate of inflation will tend to decrease.
3. The rate of inflation will be constant.
4. none of the above

1. a change in the rate of inflation
2. a change in the composition of jobs
3. a change in fiscal policy
4. a change in the price of oil
5. a change in monetary policy

1. a dramatically fluctuating unemployment rate.
2. a higher inflation rate than necessary.
3. a steadily decreasing inflation rate.
4. more unemployment than necessary.
5. an unemployment rate that is "too high."

1. 5%.
2. 10%.
3. 6.5%.
4. 20%.
5. none of the above

1. the Phillips curve illustrates the relationship between the level of inflation rate and the level of the unemployment rate.
2. a reduction in the unemployment rate will have no effect on inflation.
3. low rates of unemployment will cause steadily increasing rates of inflation.
4. the actual unemployment rate will not deviate from the natural rate of unemployment.

1. GDP
2. unemployment
3. the average wage in the country
4. productivity
5. the price level

1. 1921 to 1929
2. 1911 to 1919
3. 1901 to 1909
4. 1931 to 1939
5. none of the above

1. an increase in actual inflation
2. a reduction in α
3. a reduction in z
4. a reduction in μ
5. an increase in expected inflation

1. μ + z.
2. 0.
3. (μ + z)/α.
4. (μ + z - α).
5. a(μ + z).

1. a reduction in z
2. a reduction in expected inflation
3. an increase in μ
4. an increase in α
5. none of the above

1. smaller than last year's inflation rate
2. about equal to last year's inflation rate
3. equal to the average inflation rate over the past ten years
4. larger than last year's inflation rate
5. equal to the average inflation rate over the past five years

1. is now higher than in the U.S.
2. has become less "natural," since it is now almost entirely determined by the policies of a few large corporations.
3. will soon exceed the percentage of the labor force that is working.
4. is no longer a relevant concept.
5. has steadily declined over the past two decades.

1. the Phillips curve illustrates the relationship between the level of inflation rate and the level of the unemployment rate.
2. a reduction in the unemployment rate will have no effect on inflation.
3. low rates of unemployment will cause steadily increasing rates of inflation.
4. high rates of unemployment will cause steadily declining rates of inflation.

1. the labor force is defined differently in Japan.
2. the average worker switches jobs less often in Japan.
3. the average worker is much younger in Japan.
4. unemployment is defined differently in Japan.
5. the average worker lives with several family members in Japan.

1. Solow
2. Friedman
3. Samuelson
4. Phillips