1.An episode when unemployment and the price level both increase while real output falls below its natural level is called __________

a great depression

an inflationary recession

demand-side inflation

hyperinflation

2.According to the Phillips curve, other things being equal, as the rate of inflation increases, which of the following occurs?

The unemployment rate increases

Hyperinflation slows

Real output increases

The unemployment rate decreases

3.According to the modern interpretation, which of the following is true of the Phillips curve?

Neither A nor B

It has a negative slope in the short run.

Both A and B

It is vertical in the long run.

4.The economy is experiencing substantial unemployment. If policy does not change, then we would expect to see ___________ inflation and ___________ unemployment in the long run.

lower; higher

higher; higher

lower; lower

higher; lower

5.Which of the following is most likely to cause demand-side inflation?

An increase in net taxes

An increase in the price of an essential imported input

A decrease in worker productivity

An increase in the money supply