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Reading 25: U.S. Inflation, Unemployment, and Business Cycl

Q1. Analysis using the AS-AD model suggests that if expected inflation equals actual inflation:

A)    unemployment will fall.

B)    the economy will remain at full-employment GDP.

C)    unemployment will rise.

Q2. The short-run relationship between unexpected inflation and:

A)    unemployment is positive.

B)    actual inflation is positive.

C)    unemployment is negative.

Q3. If an increase in aggregate demand is greater than expected, actual inflation is:

A)    less than expected inflation and unemployment decreases.

B)    greater than expected inflation and unemployment increases.

C)    greater than expected inflation and unemployment decreases.

答案和详解如下:

Q1. Analysis using the AS-AD model suggests that if expected inflation equals actual inflation:

A)    unemployment will fall.

B)    the economy will remain at full-employment GDP.

C)    unemployment will rise.

Correct answer is B)

AS-AD model analysis indicates that if expected and actual inflation are equal, the economy will remain at full-employment GDP.

Q2. The short-run relationship between unexpected inflation and:

A)    unemployment is positive.

B)    actual inflation is positive.

C)    unemployment is negative.

Correct answer is C)

The relationship between unexpected inflation and unemployment is a negative one in the short run. There should be no trend in the relationship between unexpected and actual inflation—that is the difference should be zero in the long run and uncorrelated in the short run.

Q3. If an increase in aggregate demand is greater than expected, actual inflation is:

A)    less than expected inflation and unemployment decreases.

B)    greater than expected inflation and unemployment increases.

C)    greater than expected inflation and unemployment decreases.

Correct answer is C)

A greater than expected increase in aggregate demand suggests that actual inflation will exceed expected inflation and unemployment will decrease.

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