The Phillips Curve

Refer to Exhibit 6. Suppose the economy is operating at point (D) As people revise their price expectations ?

by
Refer to Exhibit 6. Suppose the economy is operating at point (D) As people revise their price expectations ?

A. The short-run Phillips curve will shift in the direction of the short-run Phillips curve associated with an expectation of 3 percent inflation
B. The short-run Phillips curve will shift in the direction of the short-run Phillips curve associated with an expectation of 9 per cent inflation
C. The short-run Phillips curve will shift in the direction of the short-run Phillips curve associated with an expectation of 6 percent inflation
D. The long-run Phillips curve will shift to the left

The natural rate hypothesis argues that ?

by
The natural rate hypothesis argues that ?

A. in the long run the unemployment rate returns to the natural rate, regardless of inflation
B. Unemployment is always below the natural rate
C. Unemployment is always above the natural rate
D. Unemployment is always equal to the natural rate

When actual inflation exceeds expected inflation ?

by
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

An increase in expected inflation ?

by
An increase in expected inflation ?

A. shifts the short run Phillips curve downward and the unemployment inflation trade-off is less favorable.
B. shifts the short-run Phillips curve upward and the unemployment inflation trade-off is more favorable
C. Shift the short-run Phillips curve downward and the unemployment inflation trade-off is more favorable
D. Shifts the Short run Phillips curve upward and the unemployment inflation trade-off is less favorable

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 ?

by
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 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 ?

by
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

The misery index Which some commentators suggest measures the health of the economy, is ?

by
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