Inflation is a process in which ________________________________.

demand always increases
the price level of certain commodities increase
the value of money is increasing
the price level is rising

Demand-pull inflation is an inflation that results from an initial _____________.

increase in natural resource prices
increase in wage rates
decrease in aggregate demand
increase in aggregate demand

Cost-push inflation is an inflation that results from an initial ________________.

increase in taxes
decrease in taxes
increase in investment
increase in money wages or money prices of raw materials

Stagflation is the combination of a ______________ and ______________.

rise in the price level; a decrease in real GDP
fall in inflation; an increase in real GDP
rise in inflation; a decrease in real GDP
fall in the price level; an increase in real GDP

An unanticipated inflation redistributes income so that _____________.

employers sometimes gain and sometimes lose
there is high unemployment
employers gain at the expense of the workers
workers gain at the expense of the employers

The forecast of inflation that is based on all the relevant information is called a ________________.

rational expectation
rational inflation expectation
national inflation rate
rational inflation rate

A more direct way to study inflation and unemployment is by using _______________.

a Phillips curve
data from high inflation countries
the AS-AD model
data from the OECD

The short-run Phillips curve shows the relationship between _______, holding the expected inflation rate and the natural unemployment rate constant.

inflation and unemployment
the price level and real GDP
the price level and unemployment
inflation and employment

The long-run Phillips curve is __________________________.

vertical at the natural unemployment rate
vertical at the actual inflation rate
horizontal at the actual inflation rate
horizontal at the expected inflation rate

The real interest rate _______ the expected inflation rate _______ the nominal interest rate, approximately.

plus; equals
equals; plus
minus; equals
equals; minus

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