The Phillips Curve MCQs

Option A: reduce inflation with little or no increase in unemployment

Option B: Increase inflation but would decrease unemployment by an unusually large amount

Option C: increase inflation with little or no decrease in unemployment

Option D: reduce inflation but it would increase unemployment by an unusually large amount

Correct Answer: reduce inflation with little or no increase in unemployment ✔

Option A: H

Option B: F

Option C: E

Option D: c

Correct Answer: F ✔

Option A: d

Option B: G

Option C: E

Option D: b

Correct Answer: d ✔

Option A: b

Option B: I

Option C: a

Option D: H

Correct Answer: H ✔

Option A: Shifts the short-run Phillips curve downward and make the unemployment inflation trade-off less favorable

Option B: Shifts the short run Phillips curve upward and makes the unemployment inflation trade-off more favorable

Option C: Shifts the short run Phillips curve upward and makes the Unemployment inflation trade off more favorable

Option D: Shifts the short run Phillips curve downward and makes the unemployment inflation trade off more favorable

Correct Answer: Shifts the short run Phillips curve downward and makes the unemployment inflation trade off more favorable ✔

Option A: An increase in the minimum wage

Option B: An increase in the expected inflation

Option C: An increase in the price of foreign oil

Option D: An increase in the aggregate demand

Correct Answer: An increase in the minimum wage ✔

Option A: The economy will experience an increase in inflation

Option B: The economy will experience a decrease in inflation

Option C: Inflation will be unaffected if price expectations are unchanging

Option D: None of these answers

Correct Answer: The economy will experience an increase in inflation ✔

Option A: a higher rate of inflation is associated with a lower unemployment rate

Option B: a higher rate of growth in output is associated with a lower unemployment rate

Option C: a higher rate of inflation is associated with a higher unemployment rate

Option D: a higher rate of growth in output is associated with a higher unemployment rate.

Correct Answer: a higher rate of inflation is associated with a lower unemployment rate ✔

Option A: the trade-off between inflation and unemployment

Option B: The trade-off between output and unemployment

Option C: The positive relationship between output and unemployment

Option D: The positive relationship between inflation and unemployment

Correct Answer: the trade-off between inflation and unemployment ✔

Option A: an increase in the level of output

Option B: a decrease in the unemployment rate

Option C: an increase in the rate of inflation

Option D: All of these answers

Correct Answer: an increase in the rate of inflation ✔

Option A: a reduction in output of 20 percent

Option B: a reduction in output of 5percent

Option C: a reduction in output of 15 percent

Option D: a reduction in output of 35 percent

Correct Answer: a reduction in output of 20 percent ✔

Option 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

Option 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

Option 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

Option D: The long-run Phillips curve will shift to the left

Correct Answer: The long-run Phillips curve will shift to the left ✔

Option A: F

Option B: a

Option C: H

Option D: I

Correct Answer: H ✔

Option A: H

Option B: c

Option C: d

Option D: F

Correct Answer: F ✔

Option A: in the long run the unemployment rate returns to the natural rate, regardless of inflation

Option B: Unemployment is always below the natural rate

Option C: Unemployment is always above the natural rate

Option D: Unemployment is always equal to the natural rate

Correct Answer: in the long run the unemployment rate returns to the natural rate, regardless of inflation ✔

Option A: Unemployment is equal to the natural rate of unemployment

Option B: People will reduce their expectations of inflation in the future

Option C: Unemployment is greater than the natural rate of unemployment

Option D: Unemployment is less than the natural rate of unemployment

Correct Answer: Unemployment is less than the natural rate of unemployment ✔

Option A: shifts the short run Phillips curve downward and the unemployment inflation trade-off is less favorable.

Option B: shifts the short-run Phillips curve upward and the unemployment inflation trade-off is more favorable

Option C: Shift the short-run Phillips curve downward and the unemployment inflation trade-off is more favorable

Option D: Shifts the Short run Phillips curve upward and the unemployment inflation trade-off is less favorable

Correct Answer: Shifts the Short run Phillips curve upward and the unemployment inflation trade-off is less favorable ✔

Option A: is vertical

Option B: is negatively sloped

Option C: has a slope that is determined by how fast people adjust their price expectations

Option D: is positively sloped

Correct Answer: is vertical ✔

Option A: decreases unemployment

Option B: decrease growth

Option C: increases unemployment

Option D: decreases inflation

Correct Answer: decreases unemployment ✔

Option A: The sum of the growth rate of output and the inflation rate

Option B: The sum of the natural rate of unemployment and the actual rate of unemployment

Option C: The sum of the inflation rate and the central bank’s refinancing rate

Option D: The sum of the unemployment rate and the inflation rate

Correct Answer: The sum of the unemployment rate and the inflation rate ✔