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The Short-Run Policy Tradeoff

15. The Short-Run Policy Tradeoff. CLICKER QUESTIONS. Checkpoint 15.3. Checkpoint 15.1. Checkpoint 15.2. Question 1. Question 8. Question 5. Question 9. Question 6. Question 2. Question 10. Question 3. Question 7. Question 4. CHECKPOINT 15.1. Question 1

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The Short-Run Policy Tradeoff

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  1. 15 The Short-Run Policy Tradeoff CLICKER QUESTIONS

  2. Checkpoint 15.3 Checkpoint 15.1 Checkpoint 15.2 Question 1 Question 8 Question 5 Question 9 Question 6 Question 2 Question 10 Question 3 Question 7 Question 4

  3. CHECKPOINT 15.1 Question 1 As the economy moves along the short-run Phillips curve and the unemployment rate increases, the inflation rate ________. • decreases • increases • does not change • initially decreases and then increases • initially increases and then decreases

  4. CHECKPOINT 15.1 Question 2 If real GDP exceeds potential GDP, then employment is ____ full employment and the unemployment rate ____ the natural unemployment rate. • below; exceeds • equal to; is less than • above; is less than • above; exceeds • equal to; equal to

  5. CHECKPOINT 15.1 Question 3 According to Okun’s Law, if the natural unemployment rate is 5 percent, the actual unemployment rate is 4 percent, and potential GDP is $10 trillion, then actual real GDP is ______. • $12 trillion • $11 trillion • $9.6 trillion • $10.4 trillion • $10.2 trillion

  6. CHECKPOINT 15.1 Question 4 When a movement up along the aggregate supply curve occurs, there is also _________. • a movement down along the short-run Phillips curve • a movement up along the short-run Phillips curve • a rightward shift of the short-run Phillips curve • a leftward shift of the short-run Phillips curve • neither a movement along nor a shift in the short-run Phillips curve

  7. CHECKPOINT 15.2 Question 5 When the expected inflation rate ____, the short-run Phillips curve ____. • falls; shifts upward • rises; shifts upward • rises; shifts downward • falls; does not shift • rises; might shift upward or downward depending on how the long-run Phillips curve shifts

  8. CHECKPOINT 15.2 Question 6 The natural rate hypothesis states that changes in the_____. • natural unemployment rate bring a temporary change in the inflation rate • inflation rate temporarily change the unemployment rate • unemployment rate exceed changes in the inflation rate • the unemployment rate are less than changes in the natural unemployment rate • the inflation rate temporarily change the natural unemployment rate

  9. CHECKPOINT 15.2 Question 7 If the natural unemployment rate decreases, then the short-run Phillips curve ____ and the long-run Phillips curve ____. • does not shift; shifts leftward • shifts leftward; shifts rightward • shifts rightward; shifts leftward • shifts leftward; shifts leftward • shifts leftward; does not shift

  10. CHECKPOINT 15.3 Question 8 A surprise reduction of inflation will ________. • raise the expected inflation rate • increase real GDP • create a recession • decrease the natural unemployment rate • eventually shift in the short-run Phillips curve downward

  11. CHECKPOINT 15.3 Question 9 A credible announced inflation reduction results in ____ natural unemployment rate and ____ shift in the short-run Phillips curve. • a higher; an upward • a lower; an upward • no change in the; an upward • no change in the; a downward • no change in the; no

  12. CHECKPOINT 15.3 Question 10 In 1981, the Fed _____. • created a surprise inflation reduction policy and created an expansion • created a surprise inflation reduction policy and created a recession • credibly announced an inflation reduction policy and created a recession • credibly announced an inflation reduction policy and created an expansion • took no action so that the inflation rate skyrocketed

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