According to the Phillips curve, in the short run, if policy makers choose an expansionary policy to lower the rate of unemployment ?

A. The economy will experience an increase in inflation
B. The economy will experience a decrease in inflation
C. Inflation will be unaffected if price expectations are unchanging
D. None of these answers

Refer to Exhibit 6. Suppose the economy is operating at point (D) As people revise their price expectations ?

A. The short-run phillips curve will shift in the direction of the short-run phillips curve associated with an expectation of 3 percent inflation
B. The short-run phillips curve will shift in the direction of the short-run phillips curve associated with an expectation of 9 per cent inflation
C. The short-run phillips curve will shift in the direction of the short-run phillips curve associated with an expectation of 6 percent inflation
D. The long-run phillips curve will shift to the left

Refer to Exhibit 6. Suppose the economy is Operating in long-run equilibrium at point E. In the long run a monetary contraction will move the economy in the direction of point ?

A. F
B. A
C. H
D. I

If the sacrifice ratio is five, a reduction in inflation from 7 percent to 3 percent would require ?

A. A reduction in output of 20 percent
B. A reduction in output of 5percent
C. A reduction in output of 15 percent
D. A reduction in output of 35 percent

If a country’s policy makers were to continuously use expansionary monetary policy in an attempt to hold unemployment below the natural rate the long-run result would be ?

A. An increase in the level of output
B. A decrease in the unemployment rate
C. An increase in the rate of inflation
D. All of these answers

The natural rate hypothesis argues that ?

A. In the long run the unemployment rate returns to the natural rate, regardless of inflation
B. Unemployment is always below the natural rate
C. Unemployment is always above the natural rate
D. Unemployment is always equal to the natural rate

Refer to Exhibit 6.If People in the economy expect inflation to be 6 percent but inflation turn out to be 3 percent the economy is operating at point ?

A. H
B. C
C. D
D. F

When actual inflation exceeds expected inflation ?

A. Unemployment is equal to the natural rate of unemployment
B. People will reduce their expectations of inflation in the future
C. Unemployment is greater than the natural rate of unemployment
D. Unemployment is less than the natural rate of unemployment

If, in the long run, people adjust their price expectations so that all prices and incomes move proportionately to an increase in the price level then the long-run Phillips curve ?

A. Is vertical
B. Is negatively sloped
C. Has a slope that is determined by how fast people adjust their price expectations
D. Is positively sloped

What is Baran’s explanation for underdevelopment in Asia, Africa, and Latin America ?

A. Monopolistic business from abroad
B. Reactionary ruling coalitions
C. Weak domestic middle class
D. All of the above