In 2010, dissenters were worried that the effects of policies to reduce unemployment would create the conditions for
A. higher long-term inflation.
B. a more horizontal Phillips curve.
C. higher long-term unemployment.
D. larger budget surpluses and, thus, higher interest rates.
Answer: A
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Is the United States a command economy, a laissez-faire economy, or neither? Explain
What will be an ideal response?
Which of the following techniques adopted by the central banks around the world have helped them to achieve credibility?
a. Maintaining a low rate of inflation through tight monetary policies b. Publicly announcing a target rate of inflation c. Refusing to bail out the commercial banks at times of failure d. Supporting all government budget deficits through deficit financing e. Reducing unemployment amidst high inflation
Inflation will generally redistribute purchasing power when
a. it is fully expected b. it is completely unexpected c. it is greater than 3 percent d. it is greater than 5 percent e. it is greater than 10 percent
An unanticipated shift to a more expansionary monetary policy that permanently increases the rate of inflation from 2 to 6 percent will
a. reduce unemployment in the short run, but unemployment will return to the natural rate in the long run. b. reduce unemployment in the short run, but unemployment will exceed the natural rate in the long run. c. increase unemployment in the short run, but unemployment will return to the natural rate in the long run. d. exert an unpredictable impact on unemployment in the short run, but unemployment will return to the natural rate in the long run.