Figure 4 Mation (pereent per year) Lngn Philipe curve Shon n Pilps cunve Unemployment rate percent 44. Refer to Figure 4. Suppose the economy is at point Cin the figure above. Which of the following is true? Select one: O a. The short-run Phillips curve will shift to the right. O b. The short-run Phillips curve will shift to the left. Oc The economy will move from C to A. O d. Workers and firms expect inflation to be 1%.

Figure 4 Mation (pereent per year) Lngn Philipe curve Shon n Pilps cunve Unemployment rate percent 44. Refer to Figure 4. Suppose the economy is at point Cin the figure above. Which of the following is true? Select one: O a. The short-run Phillips curve will shift to the right. O b. The short-run Phillips curve will shift to the left. Oc The economy will move from C to A. O d. Workers and firms expect inflation to be 1%.

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter35: The Short-Run Trade-off Between Inflation And Unemployment

Section: Chapter Questions

Problem 3CQQ

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Which of the following shifts in aggregate demand and short-run aggregate supply would cause an unambiguous increase in inflation? Select one: O a. A decrease in AD and an increase in SRAS O b. No change in AD and an increase in SRAS O c. An increase in AD and an increase in SRAS d. An increase in AD and a decrease in SRAS O e. A decrease in AD and a decrease in SRAS
An increase in expected inflation will O A. decrease the natural rate of unemployment. O B. shift the long - run Phillips curve to the right. OC. increase real wages. O D. None of the above is correct.
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If inflationary expectations increase, the Phillips curve will Select one: O a. shift to the right O b. become vertical O c. shift to the left O d. become upward sloping
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Check According to the modern view of the Phillips curve, expansionary macroeconomic policy that leads to inflation will reduce unemployment .. only if people underestimate the inflationary side effects of the policy Ob only if people overestimate the inflationary side effects of the policy. Ocif people accurately anticipate the inflationary side effects of the policy Od only if monetary pohcy provides the macroeconomic stamulus.
K The Phillips Curve shows O A. an inverse relation between the interest rate and exchange rate. O B. an inverse relation between unemployment and inflation. OC. a direct relation between unemployment and inflation. O D. an inverse relation between the price levels and tax revenues.
When inflation falls, people Select one: O a. make less frequent trips to the bank and firms make more frequent price changes O b. make more frequent trips to the bank and firms make less frequent price changes Oc. make less frequent trips to the bank and firms make less frequent price changes O d. make more frequent trips to the bank and firms make more frequent price changes ge en this page
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2. What is the eqution and shape of the modem aggregate supply curve according to imperfect infomation model? Using the equation of Aggregate Supply (AS) derive the equation of Expectation augmented Phillips curve and explain causes of inflation in tems of it. How does expectation augmented Phillips curve explain Stagflation?
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