978-1259723223 Test Bank TBChap038 Part 6

38-101

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A.

P1, and output will be at Q1.

B.

P3, and output will be at Q1.

C.

P2, and output will be at Q2.

D.

P3, and output will be at Q3.

164.

Refer to the graph. Assume that the economy is initially at full-employment equilibrium at

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Difficu l t y : 02 Medium

Learning Objective: 38-02 Discuss how to apply the “extended” (short-run/long-run) AD–AS

model to inflation, recessions, and economic growth.

Test Bank: II

Topic: Applying the Extended AD–AS Model

Type: Graph

165.

Refer to the graph. Assume that the economy is initially at full-employment equilibrium at

point A. If there is cost-push inflation in this

economy and the government pursues an

expansionary fiscal policy, then in the long run the

166.

Refer to the graph. Assume that the economy is initially at equilibrium at point A. If there is

a recession in the economy because AD1

shifts to AD2, and wages and prices are flexible,

then in the long run the price level will be

167.

Refer to the graph. If Qf is potential GDP and wages and prices are flexible, then the long-

run aggregate supply curve will be

168.

Refer to the graph. Assume that the economy is initially at equilibrium at point C and that the

government has adopted a hands-off policy

approach. If demand-pull inflation occurs, then

the final long-run equilibrium point will be point ; while if cost-push inflation occurs

(starting at point C), then the final long-run equilibrium point will be point .

169.

Refer to the graph. Economic growth driven by productivity and technology would be

illustrated as a shift of

170.

Refer to the graph. An expansion of the economy‘s production possibilities can, by itself

171.

Refer to the graph. Ongoing inflation would occur if the Fed

172.

The traditional Phillips Curve shows the

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D.

inverse correlation between the short-run and long-run aggregate supply.

173.

The traditional Phillips Curve showing a trade-off between inflation and

unemployment is based on having a stable

174.

If the economy is operating in the intermediate range of the aggregate supply curve, then

the greater the rate of growth of aggregate

demand, the

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Learning Objective: 38-03 Explain the short-run trade-off between inflation and unemployment

(the Phillips Curve).

Test Bank: II

Topic: The Inflation-Unemployment Relationship

175.

Refer to the graphs. Assume that the economy is initially at equilibrium where AD2 and AS

intersect in Graph 1, and also assume that the

economy is initially at point C in Graph 2. A

movement from point C to point B in graph 2 would most likely be associated, in graph 1,

with a shift of

176.

Refer to the graphs. Assume that the economy is initially at equilibrium where AD2 and AS

intersect in Graph 1, and also assume that the

economy is initially at point C in Graph 2. If

the government implements a contractionary or restrictive policy, it would make the

economy in graph 2

177.

Refer to the graphs. Assume that the economy starts out at point D in Graph 2, whereas full

employment would be attained at point C. The

Phillips curve shown suggests that full

employment

178.

Given a Phillips Curve with stable and predictable inflation and unemployment rate

trade-offs, it appears that

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Access i b i lity: Keyboard Navigation

Blooms: Understand

Difficu l t y : 02 Medium

Learning Objective: 38-03 Explain the short-run trade-off between inflation and unemployment

(the Phillips Curve).

Test Bank: II

Topic: The Inflation-Unemployment Relationship

179.

The inflation and unemployment data for the 1970s suggest that the aggregate-supply

shocks of that period caused the

180.

Adverse aggregate-supply shocks or stagflation would cause a

181.

A rightward shift of the Phillips Curve suggests that

182.

Stagflation can be described as a

183.

Which event probably contributed to the stagflation of the 1970s?

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Test Bank: II

Topic: The Inflation-Unemployment Relationship

184.

Adverse aggregate supply shocks would result in

185.

A potential cause of stagflation is

186.

Which factor contributed to the demise of stagflation during the 1982–1989 period?

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written consent of McGraw-Hill Education.

Blooms: Understand

Difficu l t y : 02 Medium

Learning Objective: 38-03 Explain the short-run trade-off between inflation and unemployment

(the Phillips Curve).

Test Bank: II

Topic: The Inflation-Unemployment Relationship

187.

Stagflation’s demise during the 1980s resulted in a

188.

In the period 2011 through 2015, as the economy slowly mended, the economy

experienced an ongoing pattern of falling inflation

coinciding with falling unemployment.

This suggests a

189.

The misery index is a measure of national economic discomfort that adds together a

nation‘s

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A.

saving and investment.

B.

budget deficit and public debt.

C.

unemployment rate and inflation rate.

D. level of taxation with the amount of government spending.

190.

Consider the following national data: tax revenues as a percentage of GDP: 25 percent;

government spending as a percentage of GDP: 31

percent; unemployment rate: 9 percent;

inflation rate: 6 percent. What is the misery index for this nation?

191.

Refer to the graph. Assume the economy is at the initial position of B2. An increase in

aggregate demand with no corresponding change in

inflation expectations and wage rates

will tend to

192.

Refer to the graph. Assume the economy is at the initial position of B2. An increase in

aggregate demand with a corresponding adjustment

in inflation expectations and wages

will tend to

193.

Refer to the graph. Assume the economy is at the initial position of B2. It is possible for the

government to reduce the unemployment rate

and move the economy to C2 if