Unit 5: Long-Run Consequences of Stabilization Policies

The short-run Phillips curve depicts

The long-run Phillips curve is vertical at the natural rate of unemployment because

Crowding out refers to the idea that

An increase in expected inflation will cause the short-run Phillips curve to

A decrease in aggregate supply due to an oil supply shock will cause which of the following changes on the short-run Phillips curve?

In the loanable funds market, an increase in the government budget deficit will

According to the theory of rational expectations,

Which of the following best describes the effect of an increase in the national debt?

If the economy is currently operating at the natural rate of unemployment and the central bank unexpectedly increases the money supply, what will happen in the short run?

Supply-side economists argue that tax cuts

If expansionary fiscal policy leads to higher interest rates that reduce private investment, the impact of the fiscal policy on real GDP is

Deficit spending by the government is most likely to be effective at increasing real GDP when the economy is

Assume the economy is in long-run equilibrium. If the government increases spending and the central bank simultaneously increases the money supply by the same proportion, the most likely result is

An increase in the supply of loanable funds would most likely result from

Which of the following combinations of monetary and fiscal policy would be most effective at increasing real GDP while keeping interest rates relatively stable?

An inflationary gap exists when

According to the Phillips curve framework, if the expected inflation rate is 3% and the economy is at the natural rate of unemployment, the actual inflation rate is

In the long run, an increase in the money supply will lead to

The concept of "crowding out" suggests that fiscal policy is most effective when

Which of the following describes the Laffer curve?