Page 1 of 106
EC 302 Final Exam A&B ALL 300 QUESTIONS
AND CORRECT ANSWERS LATEST UPDATE THIS
YEAR
EC 302 Exam
Which of the following is true regarding the short run Phillips curve?
a. An increase in expected inflation causes 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. An 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
a
An increase in expected inflation causes the whole short run Phillips Curve to shift:
upward
Which of the following is true?
a. The long run Phillips curve is a vertical line, since wages and prices are fully flexible in the
long run
b. The long run Aggregate Supply curve is a vertical line, since wages and prices are fully
flexible in the long run
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c. The short run Phillips Curve has a negative slope
d. The short run Aggregate Supply curve has a positive slope
e. All of the above
e
long run phillips curve and long run aggregate supply curve are both:
vertical lines
short run phillips curve has:
neg slope
short run aggregate supply curve has:
pos slope
π = πe - 1.5(U-UN) + ρ
U-UN = -0.5(Y-YP)
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?
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, Page 3 of 106
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
c
Which of the following is true regarding the difference between a temporary supply shock
and a permanent supply shock?
a. A temporary supply shock could be caused from a change in the price of oil, shifting the
short run aggregate supply curve
b. A permanent supply shock could be caused from a change in technology, shifting the long
run aggregate supply curve
c. A permanent supply shock could be caused from a change in immigration laws, resulting in
a change in the labor force shifting the long run aggregate supply curve
d. A permanent supply shock could be caused from a change in the economy's capital stock,
shifting the long run aggregate supply curve
e. All of the above
e
A temporary supply shock could be caused from a change in the ______________, shifting the
short run aggregate supply curve.
price of oil
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A permanent supply shock could be caused from a change in ___________ or __________,
shifting the long run aggregate supply curve.
tech, economy's capital stock
A permanent supply shock could be caused from a change in _____________, resulting in a
change in the labor force shifting the long run aggregate supply curve
immigration laws
Over the past few decades, the internet has provided information to help people learn new
skills, in addition to reducing the amount of time people spend looking for a job given the
increased flow of information between potential employees and employers. This has caused
which of the following?
a. An increase in frictional unemployment
b. An increase in structural unemployment
c. A increase in cyclical unemployment
d. A decrease in the natural rate of unemployment
d
moving between jobs unemployment
frictional
mismatch of skills unemployment
4
EC 302 Final Exam A&B ALL 300 QUESTIONS
AND CORRECT ANSWERS LATEST UPDATE THIS
YEAR
EC 302 Exam
Which of the following is true regarding the short run Phillips curve?
a. An increase in expected inflation causes 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. An 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
a
An increase in expected inflation causes the whole short run Phillips Curve to shift:
upward
Which of the following is true?
a. The long run Phillips curve is a vertical line, since wages and prices are fully flexible in the
long run
b. The long run Aggregate Supply curve is a vertical line, since wages and prices are fully
flexible in the long run
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, Page 2 of 106
c. The short run Phillips Curve has a negative slope
d. The short run Aggregate Supply curve has a positive slope
e. All of the above
e
long run phillips curve and long run aggregate supply curve are both:
vertical lines
short run phillips curve has:
neg slope
short run aggregate supply curve has:
pos slope
π = πe - 1.5(U-UN) + ρ
U-UN = -0.5(Y-YP)
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?
2
, Page 3 of 106
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
c
Which of the following is true regarding the difference between a temporary supply shock
and a permanent supply shock?
a. A temporary supply shock could be caused from a change in the price of oil, shifting the
short run aggregate supply curve
b. A permanent supply shock could be caused from a change in technology, shifting the long
run aggregate supply curve
c. A permanent supply shock could be caused from a change in immigration laws, resulting in
a change in the labor force shifting the long run aggregate supply curve
d. A permanent supply shock could be caused from a change in the economy's capital stock,
shifting the long run aggregate supply curve
e. All of the above
e
A temporary supply shock could be caused from a change in the ______________, shifting the
short run aggregate supply curve.
price of oil
3
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A permanent supply shock could be caused from a change in ___________ or __________,
shifting the long run aggregate supply curve.
tech, economy's capital stock
A permanent supply shock could be caused from a change in _____________, resulting in a
change in the labor force shifting the long run aggregate supply curve
immigration laws
Over the past few decades, the internet has provided information to help people learn new
skills, in addition to reducing the amount of time people spend looking for a job given the
increased flow of information between potential employees and employers. This has caused
which of the following?
a. An increase in frictional unemployment
b. An increase in structural unemployment
c. A increase in cyclical unemployment
d. A decrease in the natural rate of unemployment
d
moving between jobs unemployment
frictional
mismatch of skills unemployment
4
