Question Details

The employment numbers were a bit of a shocker



1. If we are at the natural rate of unemployment, an increase in aggregate demand will lower unemployment in the short run 
a) if workers perfectly anticipate inflation b) regardless of workers' inflation estimates 
c) if workers overestimate the consequent inflation 
d) if workers underestimate the consequent inflation 
2. If rapid inflation occurs in a relatively full employment economy, well-coordinated monetary and fiscal policies would involve a budget 
a) deficit and central bank increase in annual bond purchases 
b) surplus and central bank increase in annual bond purchases 
c) deficit and central bank reduction in annual bond purchases 
d) surplus and central bank reduction in annual bond purchases 
3. "The employment numbers were a bit of a shocker, but the market isn't that concerned about inflation because of the potential for Asian weakness to slow the U.S. economy." This is best interpreted as 
a) unemployment rose and U.S. exports to Asia should rise 
b) unemployment rose and U.S. exports to Asia should fall 
c) unemployment fell and U.S. exports to Asia should rise 
d) unemployment fell and U.S. exports to Asia should fall 
4. "The snag is that governments, like voters, are naturally more interested in short-term than long-term growth. Inflationary policies can spur growth for a time, which is why politicians have often found them so tempting. This is the best argument for making central banks ........." This is best completed with 
a) responsible for fiscal policy b) subservient to governments 
c) independent of governments d) focus policy on unemployment 
5. "Undoubtedly, the amazing drop in the unemployment rate adds to pressure on Mr. Greenspan, the chairman of the Fed, to .........." This is best completed with 
a) print more money b) fix the interest rate 
c) raise the interest rate d) lower the interest rate



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