Chapter 35

Question 1

Short and long run AS

Answer 1

price level rises but resource prices don’t (short run)

resource prices catch up (long run)

Question 2

phillips curve

Answer 2

showing the relationship between the unemployment rate and the annual rate of increase in the price level

Question 3

stagflation

Answer 3

inflations accompanied by stagnation in the rate of growth of output and an increase in unemployment in the economy

Question 4

long run vertical phillips curve

Answer 4

after all nominal wages have adjusted to changes in the rate of inflation; a line emanating straight upward at the economy’s natural rate of unemployment

Question 5

inflation

Answer 5

rise in general level of prices in an economy

Question 6

disinflation

Answer 6

reduction in the rate of inflation

Question 7

supply side economics

Answer 7

emphasizes the role of costs and aggregate supply in explaining inflation, unemployment, and economic growth

Question 8

LAFFER CURVE

Answer 8

curve relating government tax rates and tax revenues on which a particular tax rate maximizes revenues