EC 302 Exam 2 NCSU Questions With
Complete Solutions
Over ||the ||past ||decade ||or ||so, ||the ||internet ||has ||reduced ||the ||amount ||of ||time ||people ||
spend ||looking ||for ||a ||job, ||given ||the ||increased ||flow ||of ||information ||between ||potential ||
employees ||and ||employers, ||e.g., ||job ||descriptions, ||resumes, ||and ||other ||valuable ||
information ||available ||electronically. ||This ||has ||caused ||which ||of ||the ||following?
a. ||A ||decrease ||in ||cyclical ||unemployment
b. ||An ||increase ||in ||cyclical ||unemployment
c. ||A ||decrease ||in ||the ||natural ||rate ||of ||unemployment
d. ||An ||increase ||in ||the ||natural ||rate ||of ||unemployment ||- ||CORRECT ||ANSWER✔✔-c. ||a ||
decrease ||in ||the ||natural ||rate ||of ||unemployment
Which ||of ||the ||following ||is ||true ||regarding ||the ||short-run ||Phillips ||curve?
a. ||An ||increase ||in ||expected ||inflation ||would ||cause ||the ||whole ||curve ||to ||shift ||upward.
b. ||An ||increase ||in ||expected ||inflation ||causes ||the ||whole ||curve ||to ||shift ||downward.
c. ||An ||increase ||in ||the ||actual ||unemployment ||rate ||above ||the ||natural ||rate ||of ||
unemployment, ||causes ||inflation ||to ||increase ||which ||is ||a ||movement ||up ||and ||to ||the ||left ||
along ||the ||curve ||itself.
d. ||A ||decrease ||in ||the ||actual ||unemployment ||rate ||below ||the ||natural ||rate ||of ||
unemployment, ||causes ||inflation ||to ||decrease ||which ||is ||a ||movement ||down ||and ||to ||the ||
right ||along ||the ||curve ||itself ||- ||CORRECT ||ANSWER✔✔-a. ||An ||increase ||in ||expected ||inflation ||
would ||cause ||the ||whole ||curve ||to ||shift ||upward.
How ||does ||the ||long ||run ||Phillips ||curve ||differ ||from ||the ||short-run ||Phillips ||curve?
, a. ||The ||short ||run ||Phillips ||curve ||is ||a ||vertical ||line, ||since ||wages ||and ||prices ||are ||fully ||flexible
||in ||the ||short ||run.
b. ||The ||short ||run ||Phillips ||curve ||is ||a ||vertical ||line, ||since ||wages ||and ||prices ||are ||not ||fully ||
flexible ||in ||the ||short ||run.
c. ||The ||long ||run ||Phillips ||curve ||is ||a ||straight ||line ||since ||wages ||and ||prices ||are ||fully ||flexible ||
in ||the ||long ||run.
d. ||The ||long ||run ||Phillips ||curve ||is ||a ||vertical ||line, ||since ||wages ||and ||prices ||are ||not ||fully ||
flexible ||in ||the ||long ||run. ||- ||CORRECT ||ANSWER✔✔-c. ||The ||long ||run ||Phillips ||curve ||is ||a ||
straight ||line ||since ||wages ||and ||prices ||are ||fully ||flexible ||in ||the ||long ||run.
π ||= ||π^e ||- ||1.5(U-UN) ||+ ||ρ
U-UN ||= ||-0.5(Y-Y^P)
The ||equations ||above ||represent ||the ||Phillips ||curve ||and ||Okun's ||law ||respectively. ||Assume ||
expectations ||are ||adaptive, ||inflation ||last ||year ||was ||2%, ||potential ||output ||is ||constant ||at ||$10
||trillion, ||and ||ρ=0 ||(no ||price ||shocks ||affect ||the ||economy). ||If ||output ||this ||year ||(current ||year)
||is ||$11 ||trillion, ||what ||will ||be ||the ||level ||of ||inflation ||this ||year ||given ||the ||short ||run ||level ||of ||
aggregate ||supply ||calculated ||from ||the ||above? ||What ||will ||be ||the ||level ||of ||inflation ||the ||
following ||year ||if ||output ||the ||following ||year ||again ||is ||$11 ||trillion, ||again ||assuming ||adaptive
||expectations?
a. ||1.25% ||in ||current ||year; ||0.5% ||in ||following ||year
b. ||2% ||in ||current ||year; ||2.75% ||in ||following ||year
c. ||2.75% ||in ||current ||year; ||3.5% ||in ||following ||year
d. ||4% ||in ||current ||year; ||6% ||in ||following ||year ||- ||CORRECT ||ANSWER✔✔-c. ||2.75% ||in ||current ||
year; ||3.5% ||in ||following ||year
Which ||of ||the ||following ||is ||true ||regarding ||the ||difference ||between ||a ||permanent ||supply ||
shock ||and ||a ||temporary ||supply ||shock, ||as ||described ||by ||the ||author ||of ||our ||text?
a. ||A ||temporary ||supply ||shock ||could ||be ||caused ||from ||an ||increase ||in ||the ||price ||of ||oil ||
shifting ||the ||short ||run ||aggregate ||supply ||curve
Complete Solutions
Over ||the ||past ||decade ||or ||so, ||the ||internet ||has ||reduced ||the ||amount ||of ||time ||people ||
spend ||looking ||for ||a ||job, ||given ||the ||increased ||flow ||of ||information ||between ||potential ||
employees ||and ||employers, ||e.g., ||job ||descriptions, ||resumes, ||and ||other ||valuable ||
information ||available ||electronically. ||This ||has ||caused ||which ||of ||the ||following?
a. ||A ||decrease ||in ||cyclical ||unemployment
b. ||An ||increase ||in ||cyclical ||unemployment
c. ||A ||decrease ||in ||the ||natural ||rate ||of ||unemployment
d. ||An ||increase ||in ||the ||natural ||rate ||of ||unemployment ||- ||CORRECT ||ANSWER✔✔-c. ||a ||
decrease ||in ||the ||natural ||rate ||of ||unemployment
Which ||of ||the ||following ||is ||true ||regarding ||the ||short-run ||Phillips ||curve?
a. ||An ||increase ||in ||expected ||inflation ||would ||cause ||the ||whole ||curve ||to ||shift ||upward.
b. ||An ||increase ||in ||expected ||inflation ||causes ||the ||whole ||curve ||to ||shift ||downward.
c. ||An ||increase ||in ||the ||actual ||unemployment ||rate ||above ||the ||natural ||rate ||of ||
unemployment, ||causes ||inflation ||to ||increase ||which ||is ||a ||movement ||up ||and ||to ||the ||left ||
along ||the ||curve ||itself.
d. ||A ||decrease ||in ||the ||actual ||unemployment ||rate ||below ||the ||natural ||rate ||of ||
unemployment, ||causes ||inflation ||to ||decrease ||which ||is ||a ||movement ||down ||and ||to ||the ||
right ||along ||the ||curve ||itself ||- ||CORRECT ||ANSWER✔✔-a. ||An ||increase ||in ||expected ||inflation ||
would ||cause ||the ||whole ||curve ||to ||shift ||upward.
How ||does ||the ||long ||run ||Phillips ||curve ||differ ||from ||the ||short-run ||Phillips ||curve?
, a. ||The ||short ||run ||Phillips ||curve ||is ||a ||vertical ||line, ||since ||wages ||and ||prices ||are ||fully ||flexible
||in ||the ||short ||run.
b. ||The ||short ||run ||Phillips ||curve ||is ||a ||vertical ||line, ||since ||wages ||and ||prices ||are ||not ||fully ||
flexible ||in ||the ||short ||run.
c. ||The ||long ||run ||Phillips ||curve ||is ||a ||straight ||line ||since ||wages ||and ||prices ||are ||fully ||flexible ||
in ||the ||long ||run.
d. ||The ||long ||run ||Phillips ||curve ||is ||a ||vertical ||line, ||since ||wages ||and ||prices ||are ||not ||fully ||
flexible ||in ||the ||long ||run. ||- ||CORRECT ||ANSWER✔✔-c. ||The ||long ||run ||Phillips ||curve ||is ||a ||
straight ||line ||since ||wages ||and ||prices ||are ||fully ||flexible ||in ||the ||long ||run.
π ||= ||π^e ||- ||1.5(U-UN) ||+ ||ρ
U-UN ||= ||-0.5(Y-Y^P)
The ||equations ||above ||represent ||the ||Phillips ||curve ||and ||Okun's ||law ||respectively. ||Assume ||
expectations ||are ||adaptive, ||inflation ||last ||year ||was ||2%, ||potential ||output ||is ||constant ||at ||$10
||trillion, ||and ||ρ=0 ||(no ||price ||shocks ||affect ||the ||economy). ||If ||output ||this ||year ||(current ||year)
||is ||$11 ||trillion, ||what ||will ||be ||the ||level ||of ||inflation ||this ||year ||given ||the ||short ||run ||level ||of ||
aggregate ||supply ||calculated ||from ||the ||above? ||What ||will ||be ||the ||level ||of ||inflation ||the ||
following ||year ||if ||output ||the ||following ||year ||again ||is ||$11 ||trillion, ||again ||assuming ||adaptive
||expectations?
a. ||1.25% ||in ||current ||year; ||0.5% ||in ||following ||year
b. ||2% ||in ||current ||year; ||2.75% ||in ||following ||year
c. ||2.75% ||in ||current ||year; ||3.5% ||in ||following ||year
d. ||4% ||in ||current ||year; ||6% ||in ||following ||year ||- ||CORRECT ||ANSWER✔✔-c. ||2.75% ||in ||current ||
year; ||3.5% ||in ||following ||year
Which ||of ||the ||following ||is ||true ||regarding ||the ||difference ||between ||a ||permanent ||supply ||
shock ||and ||a ||temporary ||supply ||shock, ||as ||described ||by ||the ||author ||of ||our ||text?
a. ||A ||temporary ||supply ||shock ||could ||be ||caused ||from ||an ||increase ||in ||the ||price ||of ||oil ||
shifting ||the ||short ||run ||aggregate ||supply ||curve
