Home > Economics 101 > Quizzes > Economics 101 Practice Test: Tradeoff between Inflation and Unemployment
Economics 101 Practice Test: Tradeoff between Inflation and Unemployment
Fast practice, instant feedback. Timer auto-submits when time’s up.
Avg score: 0% • Most missed: “In 1973, both unemployment and inflation were higher than they had been in 1969.…”
The trade-off between inflation and unemployment means that policymakers can reduce unemployment below its natural rate in the short run, but this will lead to higher inflation. The economy will eventually return to the natural rate of unemployment once workers have more realistic expectations about the rise in prices.  The Phillips curve is an economic theory that describes the short-term relationship between inflation and unemployment. The curve is named after economist A.W. Phillips, who studied unemployment and wages in the United Kingdom from 1861 to 1957.  The Phillips curve shows... Show more
Economics 101 Practice Test: Tradeoff between Inflation and Unemployment
Time left 00:00
25 Questions

1. Suppose the Fed decreased the growth rate of the money supply. Which of the following would permanently decrease?
2. An increase in expected inflation shifts the
3. The misery index is calculated as the
4. Which of the following policies would shift the long-run Phillips curve to the right?
5. In late 2000 and early 2001 crude oil prices rose. On the graph this would be shown as
6. In the late 1990s,
7. In 1973, both unemployment and inflation were higher than they had been in 1969. This can be explained by monetary policy that increased
8. If the government’s commitment to low inflation is credible, the sacrifice ratio is
9. If the sacrifice ratio is 3, reducing the inflation rate from 5 percent to 2 percent would require sacrificing
10. Which of the following is a consequence of using monetary policy to fight unemployment created by a supply shock?
11. The Phillips curve would be shifted rightward by:
12. Refer to the diagrams shown. If the economy starts at c and 1, then in the short run an increase in government expenditures moves the economy to
13. The disinflation of the early 1980s was due to:
14. If the government decided that it wanted lower inflation it would
15. Since 1984, the economy has experienced
16. Phillips found a negative relation between
17. The restrictive monetary policy followed by the Fed in the early 1980s
18. Which of the following explanations for an upward sloping aggregate supply curve would imply an upward-sloping short-run Phillips curve?
19. In the 1970s, the Fed accommodated
20. According to the long-run Phillips curve, if the Fed increases the growth rate of the money supply,
21. Which of the following would shift the long-run Phillips curve right?
22. Consider the following two sentences. Although the Volcker disinflation came at the cost of high unemployment, the cost was less than most economists predicted. The cost of the disinflation might have been even greater if people had believed that Volcker would really reduce inflation as much as he did.
23. As compared to their initial values, which of the following variables are higher in both the short and long run if the government pursues an expansionary policy?
24. In 1999, the Phillips curve was fairly far to the
25. In the late 1970s proponents of rational expectations argued that

⚡ Recently practiced quizzes in this topic
Live quiz activity
Basics of Economics Practice Test Economics 101 Practice Test: Open-Economy Macroeconomics Economics 101 Practice Test: Saving, Investment, and the Financial System Economics 101 Practice Test: Measuring a Nation's Income Economics 101 Practice Test: Basics of Macroeconomic Policy Microeconomics Final Exam Economics 101 Practice Test: Theory of the Open Economy Economics 101 Practice Test: The Market Forces of Supply and Demand ECON203 Final Exam - Econometrics Economics 101 Practice Test: The Markets for the Factors of Production
 
❤ If you liked Fatskills, consider supporting us by checking out The Life Manuals You Never Got.

🌈  Our mission is to help improve your scores in any subject and exam withonline quizzes, practice tests, study guides, & advice for students. Since 2018.
About | Explore | User Guide | Topics | Subjects | Doubt Solver | Career Aptitude Test | Answers | Free Tools | What Should We Know?
Privacy | Terms |
Without work one finishes nothing. - Ralph Waldo Emerson
© 2026 Fatskills.com

All trademarks, logos and brand names are the property of their respective owners. All company, product and service names used in this website are for identification purposes only. Use of these names, trademarks and brands does not imply endorsement.