Professional Documents
Culture Documents
Chapter 18 Inflation and Phillips Curve
Chapter 18 Inflation and Phillips Curve
Chapter 17
offers the most convincing explanation of both moderate inflations and hyperinflations.
B)
offers a convincing explanation for moderate inflations, but is less successful in explaining
hyperinflations.
C)
offers a convincing explanation for hyperinflations, but is less successful in explaining moderate
inflations.
D)
C
Question Status:
Previous Edition
2)
A.W. Phillips' study of unemployment and inflation in the United Kingdom specifically looked at the
empirical relationship between the unemployment rate and the
A)
B
Question Status:
Previous Edition
3)
1950s.
B)
1960s.
C)
1970s.
D)
1980s.
Answer:
B
Question Status:
Previous Edition
4)
The Phillips curve relationship in the U.S. data began to disintegrate in the
A)
1960s.
B)
1970s.
C)
1980s.
D)
1990s.
Answer:
B
Question Status:
Previous Edition
5)
Of the following four decades, the observed U.S. Phillips curve was steepest in the
A)
1960s.
B)
1970s.
C)
1980s.
D)
1990s.
Answer:
A
Question Status:
Previous Edition
6)
Of the following four decades, the average U.S. inflation rate was highest in the
A)
1960s.
B)
1970s.
C)
1980s.
D)
1990s.
Answer:
B
Question Status:
Previous Edition
7)
According to the Friedman-Lucas money surprise model, we should expect a stable relationship between
A)
deviations in the inflation rate from what it is expected to be and the level of real output from trend.
D)
deviations in the inflation rate from what it is expected to be and deviations in real output from trend.
Answer:
D
Question Status:
Previous Edition
8)
In the Friedman-Lucas money surprise model, an increase in the growth of nominal wages could signal
either
A)
an increase in the growth rate of money supply or an increase in the growth of total factor productivity.
B)
an increase in the growth rate of money supply or a decrease in the growth of total factor productivity.
C)
a decrease in the growth rate of money supply or an increase in the growth of total factor productivity.
D)
a decrease in the growth rate of money supply or a decrease in the growth of total factor productivity.
Answer:
A
Question Status:
New
9)
In the Friedman-Lucas money surprise model, a surprise increase in money supply growth
A)
increases the consumer's estimate of the real wage and increases the actual real wage.
B)
increases the consumer's estimate of the real wage and decreases the actual real wage.
C)
decreases the consumer's estimate of the real wage and increases the actual real wage.
D)
decreases the consumer's estimate of the real wage and decreases the actual real wage.
Answer:
B
Question Status:
New
10)
In the Friedman-Lucas money surprise model, a surprise increase in money supply growth
A)
increases the real wage and increases the real interest rate.
B)
increases the real wage and decreases the real interest rate.
C)
decreases the real wage and increases the real interest rate.
D)
decreases the real wage and decreases the real interest rate.
Answer:
D
Question Status:
New
11)
In the Friedman-Lucas money surprise model, a surprise increase in money supply growth
A)
increases inflation less than in proportion to the growth rate of the money supply.
C)
increases inflation in an equal proportion to the growth rate of the money supply.
D)
increases inflation more than in proportion to the growth rate of the money supply.
Answer:
B
Question Status:
New
12)
In the Friedman-Lucas money surprise model, any increase in output due to a surprise increase in money
supply growth
A)
is an impossibility.
Answer:
C
Question Status:
New
13)
According to the Friedman-Lucas money surprise model, we should expect a stable relationship between
deviations in the inflation rate from
A)
what it is expected to be and deviations in real output from what it is expected to be.
Answer:
C
Question Status:
Previous Edition
14)
In the United States during the 1970s, the inflation rate was relatively
A)
D
Question Status:
Previous Edition
15)
According to the Friedman-Lucas money surprise model, a stable Phillips curve relationship is most
likely in periods of
A)
accelerating inflation.
Answer:
B
Question Status:
Previous Edition
16)
Credit for the reduction of the inflation rate in the 1980s and its subsequent stability is often credited to
A)
A
Question Status:
Previous Edition
17)
C
Question Status:
Previous Edition
18)
According to the Central Bank Learning Story, if the central bank believes that the Phillips curve
relationship is stable, it will choose a point at which real output will be
A)
D
Question Status:
Previous Edition
19)
According to the Central Bank Learning Story, if the central bank tries to increase real output above its
original trend permanently, it will
A)
succeed in its real output goal, but at the cost of a constant, permanently higher rate of inflation.
B)
succeed in its real output goal, but at the cost of a permanently accelerating rate of inflation.
C)
fail in its real output goal, but will not increase the rate of inflation.
D)
fail in its real output goal and increase the equilibrium rate of inflation.
Answer:
D
Question Status:
Previous Edition
20)
Application of the Central Bank Learning Story to the U.S. economy in the later part of the twentieth
century suggests that the Federal Reserve began to understand that increases in expected inflation shift
the Phillips curve upward
A)
Even now the Federal Reserve appears not to have learned this lesson.
Answer:
B
Question Status:
Previous Edition
21)
Which of the following countries has the most explicit objectives and penalties for its central bank?
A)
Canada
B)
England
C)
New Zealand
D)
United States
Answer:
C
Question Status:
Previous Edition
22)
The Reserve Bank of New Zealand Act is unusual in that it only specifies
A)
inflation as a policy objective and because it empowers the legislature to remove the central bank
governor if the objectives are not met.
B)
inflation as a policy objective and because it empowers the prime minister to remove the central bank
governor if the objectives are not met.
C)
real output as a policy objective and because it empowers the legislature to remove the central bank
governor if the objectives are not met.
D)
real output as a policy objective and because it empowers the prime minister to remove the central bank
governor if the objectives are not met.
Answer:
B
Question Status:
Previous Edition
23)
The Central Bank Commitment Story is based upon an incentive problem due to
A)
time inconsistency.
B)
adverse selection.
C)
moral hazard.
D)
externalities.
Answer:
A
Previous Edition
24)
taking different decisions at different times despite facing the same situation.
B)
C
Question Status:
New
25)
The idea that economic agents do not make systematic errors because they use all information efficiently
is called the
A)
consistency hypothesis.
B)
B
Question Status:
Previous Edition
26)
B
Question Status:
New
27)
The original work on the application of the time inconsistency problem in macroeconomics is due to
A)
C
Question Status:
Previous Edition
28)
Application of the time inconsistency problem to monetary policy suggests that, without some
mechanism to ensure commitment, the
A)
rate of inflation will be higher and the level of real output will be lower than they would be with
commitment.
D)
rate of inflation and the level of real output will be higher than they would be with commitment.
Answer:
A
Question Status:
Previous Edition
29)
central banks should be responsible to the executive, as opposed to the legislative, branch of government.
Answer:
B
Question Status:
Previous Edition
30)
The run up in U.S. inflation in the 1970s and the subsequent decline in U.S. inflation in the 1980s and
1990s is
A)
explained equally well by the Central Bank Learning Story and the Central Bank Commitment Story.
B)
well explained by the Central Bank Learning Story, but not well explained by the Central Bank
Commitment Story.
C)
well explained by the Central Bank Commitment Story, but not well explained by the Central Bank
Learning Story.
D)
not well explained by either the Central Bank Learning Story or the Central Bank Commitment Story.
Answer:
B
Question Status:
Previous Edition
31)
D
Question Status:
Previous Edition
32)
B
Question Status:
Previous Edition
33)
can be explained equally plausibly by the Central Bank Learning Story and the Central Bank
Commitment Story.
B)
can be explained by the Central Bank Learning Story, but not the Central Bank Commitment Story.
C)
can be explained by the Central Bank Commitment Story, but not the Central Bank Learning Story.
D)
cannot be explained by either the Central Bank Learning Story or the Central Bank Commitment Story.
Answer:
B
Question Status:
Previous Edition