Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Question
Chapter 14, Problem 4QQ
To determine
The shift in the aggregate demand and the inflation.
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What is true along the long-run Phillips curve? A. A labor shortage exists. B. A tradeoff exists between the inflation rate and the unemployment rate. C. The economy is at full employment. D. The inflation rate equals the expected inflation rate and any unemployment rate is possible.
An increase in worker productivity brought about by the introduction of new technology into the workplace willa. shift the long-run Phillips curve to the left.b. shift the long-run Phillips curve to the right.c. decrease aggregate demand, since workers will lose their jobs.d. cause the aggregate demand curve to become horizontal.
Give proper explanations for the correct one
What 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 curve
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- Suppose the long-run Phillips curve shifts to the right. For any given rate of money growth and inflation, how would unemployment and output change? a. Unemployment would be higher, and output would be lower. b. Unemployment would be higher, and output would be higher. c. Unemployment would be lower, and output would be lower. d. Unemployment would be lower, and output would be higher.arrow_forwardWhat is true along the long-run Phillips curve? A. A labor shortage exists. B. A tradeoff exists between the inflation rate and the unemployment rate. C. The economy is at full employment. D. The inflation rate equals the expected inflation rate and any unemployment rate is possible. th aht thanksarrow_forwardThe Phillips curve shows that, in the short-run: A. expected changes in aggregate demand produce a positive relationship between inflation and unemployment. B. unexpected changes in aggregate demand produce a positive relationship between inflation and unemployment. C. expected changes in aggregate demand produce an inverse relationship between inflation and unemployment. D. unexpected changes in aggregate demand produce an inverse relationship between inflation and unemployment.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 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.arrow_forwardWhat 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. tha nksarrow_forward
- In theory, inflation not only ______ the value of consumers' money over time, but it also increases the ____ of producers over time. a.Decreases, wages b.Increases, interest rates c.Decreases, unemployment d.Increases, real GDParrow_forwardHow does the money wage rate change along the Phillips curves? Along the short-run Phillips curve, the money wage rate _______, and along the long-run Phillips curve, the money wage rate _______. A. rises by the same percentage as the inflation rate; rises by the same percentage as the inflation rate B. is constant; is constant C. rises by the same percentage as the inflation rate; is constant D. is constant; rises by the same percentage as the inflation rate s thank s screenshot atttachedarrow_forwardHow does the money wage rate change along the Phillips curves? Along the short-run Phillips curve, the money wage rate _______, and along the long-run Phillips curve, the money wage rate _______. A. rises by the same percentage as the inflation rate; rises by the same percentage as the inflation rate B. is constant; is constant C. rises by the same percentage as the inflation rate; is constant D. is constant; rises by the same percentage as the inflation ratearrow_forward
- To say that the natural rate of unemployment changes over time is to say that a. the long-run Phillips curve shifts over time. b. the Federal Reserve influences the natural rate of unemployment over time. c. the aggregate demand curve shifts over time. d. the short-run Phillips curve shifts over time.arrow_forwardWhich of the following is correct if there is a favorable supply shock? a. the short-run aggregate supply curve and the short-run Phillips curve both shift right. b. the short-run aggregate supply curve and the short-run Phillips curve both shift left. c. the short-run aggregate supply curve shifts left and the short-run Phillips curve shifts right. d. the short-run aggregate supply curve shifts right and the short-run Phillips curve shifts left.arrow_forwardSuppose that a fall in consumer spending causes a recession. a. Illustrate the changes in the economy using both an aggregate supply/aggregate demand diagram and a Phillips curve diagram. What happens to inflation and unemployment in the short run? (5%) b. Now suppose that over time, expected inflation changes in the same direction that actual inflation changes. What happens to the position of the short-run Phillips curve? After the recession is over, does the economy face a better or worse set of inflation– unemployment combinations? (5%)arrow_forward
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