Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 31, Problem 4MCQ
To determine
To identify:
The option that correctly states the impact of an increase in the expected inflation rate.
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What occurs when the natural unemployment rate increases?
A.
The short-run Phillips curve doesn't change and the long-run Phillips curve shifts rightward.
B.
The long-run Phillips curve doesn't change and the short-run Phillips curve shifts upward.
C.
The long-run and short-run Phillips curves shift rightward and the expected inflation rate rises.
D.
The long-run and short-run Phillips curves shift rightward and the expected inflation rate doesn't change.
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Assuming the long-run Phillips curve is vertical, a consistent increase in money supply over a period of years will _________________ the unemployment rate and will _________________ the inflation rate?
a) decrease; increase
b) increase; decrease
c) increase; have no effect on
d) decrease; decrease
e) have no effect on; increase
What occurs when the natural unemployment rate increases?
A.
The short-run Phillips curve doesn't change and the long-run Phillips curve shifts rightward.
B.
The long-run Phillips curve doesn't change and the short-run Phillips curve shifts upward.
C.
The long-run and short-run Phillips curves shift rightward and the expected inflation rate rises.
D.
The long-run and short-run Phillips curves shift rightward and the expected inflation rate doesn't change.
Chapter 31 Solutions
Foundations of Economics (8th Edition)
Ch. 31 - Prob. 1SPPACh. 31 - Prob. 2SPPACh. 31 - Prob. 3SPPACh. 31 - Prob. 4SPPACh. 31 - Prob. 5SPPACh. 31 - Prob. 6SPPACh. 31 - Prob. 7SPPACh. 31 - Prob. 8SPPACh. 31 - Prob. 9SPPACh. 31 - Prob. 10SPPA
Ch. 31 - Prob. 11SPPACh. 31 - Prob. 1IAPACh. 31 - Prob. 2IAPACh. 31 - Prob. 3IAPACh. 31 - Prob. 4IAPACh. 31 - Prob. 5IAPACh. 31 - Prob. 6IAPACh. 31 - Prob. 7IAPACh. 31 - Prob. 8IAPACh. 31 - Prob. 9IAPACh. 31 - Prob. 10IAPACh. 31 - Prob. 1MCQCh. 31 - Prob. 2MCQCh. 31 - Prob. 3MCQCh. 31 - Prob. 4MCQCh. 31 - Prob. 5MCQCh. 31 - Prob. 6MCQ
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- Which of the following is downward-sloping? a. both the long-run Phillips curve and the long-run aggregate-supply curve b. neither the long-run Phillips curve nor the long-run aggregate-supply curve c. the short-run Phillips curve, but not the long-run aggregate-supply curve d. the long-run Phillips curve, but not the long-run aggregate-supply curvearrow_forward19) The occurrence of financial crowding out implies that: Short-run fiscal expansion increases the size of the public sector Long-run growth is adversely affected by public spending Domestic banks benefit at the expense of foreign banks The long-run Phillips curve is vertical Which of the following statements are true? Only Statement (1) is correct Statements (1) and (3) are correct (3) Statements (1) and (2) are correct (4) Statements (2) and (4) are correctarrow_forwardQuestion 30 The short-run Phillips curve is based on the assumption that there is_____. no relationship between the inflation and unemployment a direct relationship between the inflation and unemployment an inverse relationship between the inflation and unemployment a trade-off between the output and unemploymentarrow_forward
- How does the modern view of the Phillips curve differ from the earlier view? ___The early view of the Phillips curve suggested that the Phillips curve shifts with changes in inflation expectations. Such a view failed to recognize that the Phillips curve is a fixed inverse relationship between inflation and unemployment. ___The early view of the Phillips curve suggested that the Phillips curve is fixed, with higher rates of inflation associated with lower rates of unemployment, and vice versa. Such a view failed to recognize the importance of inflation expectations in determining the position of the short-run Phillips curve. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardAnswer correctly and explain. I ll rate. Do it fast. The ________ suggests a negative relationship between inflation and unemployment. Responses long-run Phillips curve short-run Phillips curve aggregate demand curvearrow_forwardQUESTION 9 The short-run Phillips curve shifts upward when: actual unemployment decreases actual unemployment increases. actual inflation increases. expected inflation increases. ●●arrow_forward
- Which of the following is vertical? a. neither the long-run Phillips curve nor the long-run aggregate supply curve b. both the long-run Phillips curve and the long-run aggregate supply curve c. the long-run Phillips curve, but not the long-run aggregate supply curve d. the long-run Phillips curve, but not the long-run aggregate supply curvearrow_forwardA politician blames the Federal Reserve for being "soft on unemployment" and claims that a permanently higher money supply growth rate will lead to a permanent reduction in the unemployment rate. The politician's argument is a. consistent with the long-run Phillips curve. Further, the long-run Phillips curve implies that such a policy would not increase inflation. b. inconsistent with the long-run Phillips curve. Further, the long-run Phillips curve implies that such a policy would increase inflation. c. inconsistent with the long-run Phillips curve. However, the long-run Phillips curve implies that such a policy would not increase inflation. d. consistent with the long-run Phillips curve. However, the long-run Phillips curve implies that such a policy would increase inflation.arrow_forwardIf the government uses contractionary monetary policy to reduce inflation from 9 to 6 percent. If people have adaptive expectations, than Inflation rate (%) 12 10 9 8 6 4 0 4 Long run Phillips curve Natural rate 5 E Short run Phillips curve 9 Unemployment rate (%) Unemployment will rise to 8 percent in the short run. The natural rate will permanently increase to 8 percent The economy will remain stuck at point E1. Unemployment will remain at 6 percent as the inflation rate falls.arrow_forward
- On a given short-run Phillips curve which of the following is held constant? a. the level of GDP b. employment c. the unemployment rate d. expected inflationarrow_forwardWhat is the effect of an increase in aggregate demand on the short-run Phillips curve? When aggregate demand increases, _______. A. the short-run Phillips curve shifts upward B. the short-run Phillips curve shifts downward C. a movement occurs upward along the short-run Phillips curve D. a movement occurs downward along the short-run Phillips curvearrow_forwardQuestion 28 A decrease in expected inflation will have what effect on the Phillips Curve? O The short-run Phillips Curve will shift up. O The short-run Phillips Curve will shift down. The long-run Phillips Curve will shift in. O The long-run Phillips Curve will shift out.arrow_forward
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