Week 12 — Quiz · Inflation, the Phillips Curve & Expectations
Course: Principles of Macroeconomics (ECON 2) · Silver Oak University (fictional sample) · Prof. Ashford
Objective 8 · 10 questions · 10 points · closed to AI · one attempt
Auto-graded (Classic QTI): see F-quiz-week-12-qti.xml for the Canvas import. Every numeric answer is pre-computed; every Phillips-curve/curve-shift claim is verified.
The questions (human-readable; answer key below)
Q1. The short-run Phillips curve (SRPC), plotted with the unemployment rate on the horizontal axis and the inflation rate on the vertical axis, is best described as —
A) Upward-sloping B) Downward-sloping C) A vertical straight line D) A horizontal straight line
Q2. An economy's short-run Phillips curve passes through the point (unemployment = 4%, inflation = 6%) and the point (unemployment = 6%, inflation = 2%). Moving from the first point to the second, unemployment and inflation —
A) Both rise B) Both fall C) Unemployment rises and inflation falls D) Unemployment falls and inflation rises
Q3. The long-run Phillips curve (LRPC) is drawn as a vertical line at the natural rate of unemployment, u* = 5%. What does this vertical shape mean?
A) Unemployment can be any value, depending on the inflation rate chosen B) In the long run, unemployment returns to 5% regardless of the inflation rate C) Inflation is always exactly 5% in the long run D) There is no relationship between inflation and unemployment at any horizon
Q4. A newly elected official proposes that the central bank permanently hold unemployment 1 percentage point below its natural rate by tolerating slightly higher inflation forever, since "the Phillips curve shows this trade-off works." What is the flaw in this reasoning?
A) There is no such thing as a short-run Phillips-curve trade-off, so the premise is false from the start B) The short-run trade-off is real, but treating it as a permanent long-run menu is THE CLASSIC ERROR — once inflation is expected, the SRPC shifts and unemployment returns to the natural rate C) The trade-off only works if inflation falls, not rises D) Milton Friedman proved unemployment can be permanently reduced this way
Q5. If workers and firms come to EXPECT a higher inflation rate than before, the short-run Phillips curve —
A) Shifts up and to the right (the same unemployment rate now comes with higher inflation) B) Shifts down and to the left (the same unemployment rate now comes with lower inflation) C) Becomes a vertical line immediately D) Stays exactly where it was — only the LRPC can shift
Q6. Using the quantity theory of money, M × V = P × Q: if the money supply M = 500, velocity V = 4, and real output Q = 1,000, the price level P equals —
A) 0.5 B) 2 C) 4 D) 2,000
Q7. In an economy, the money supply M = 300, velocity V = 5, and real output Q = 1,500. The money supply then rises by 20% (V and Q unchanged). What is the price level BEFORE and AFTER the increase?
A) Before P = 1; after P = 1.2 B) Before P = 1; after P = 1 C) Before P = 60; after P = 72 D) Before P = 1.5; after P = 1.8
Q8. (True/False) The rule "inflation is approximately equal to money growth minus output growth" is an exact, always-precise law, just like the equation of exchange (M × V = P × Q) itself. → False
Q9. (Select all that apply.) If the money supply rises 10% and velocity (V) and real output (Q) remain unchanged, which of the following are TRUE in the long run?
☑ A) The price level rises by approximately 10% ☐ B) Real output rises by approximately 10% ☑ C) Real output is unchanged ☑ D) This illustrates long-run monetary neutrality ☐ E) Velocity must have also risen to make the equation balance
Q10. (Matching) Short-run Phillips curve (SRPC) → A downward-sloping curve showing a short-run trade-off between unemployment and inflation; Long-run Phillips curve (LRPC) → A vertical line at the natural rate of unemployment, at any inflation rate; THE CLASSIC ERROR → Treating the short-run inflation-unemployment trade-off as a permanent, exploitable long-run menu; Long-run monetary neutrality → A change in the money supply changes the price level, not real output, once V and Q are fixed.
Answer key & feedback (instructor)
| Q | Type | Answer | Feedback (the idea) |
|---|---|---|---|
| 1 | MC | B | The SRPC slopes DOWN — lower unemployment tends to accompany higher inflation, in the short run. |
| 2 | MC | C | 4%→6% unemployment (rises) while 6%→2% inflation (falls) — moving along one downward-sloping curve. |
| 3 | MC | B | Vertical means unemployment always returns to 5% (the natural rate), no matter the inflation rate — the curve has "no slope" in the u–π sense. |
| 4 | MC | B | THE CLASSIC ERROR: the short-run trade-off is real but not permanent — once inflation is expected, the SRPC shifts and unemployment returns to the natural rate. |
| 5 | MC | A | Higher expected inflation gets built into wage/price decisions, so the SAME unemployment rate now comes with MORE inflation — the curve shifts up/right. |
| 6 | MC | B | M×V = 500×4 = 2,000; P = 2,000/1,000 = 2. |
| 7 | MC | A | Before: P = (300×5)/1,500 = 1,500/1,500 = 1. After M+20% → 360: P = (360×5)/1,500 = 1,800/1,500 = 1.2 — a 20% rise, matching the 20% money growth (neutrality). |
| 8 | TF | False | It is a rule-of-thumb approximation (assumes stable velocity); MV = PQ itself is an exact identity — do not conflate the two. |
| 9 | MA | A, C, D | With V and Q fixed, all of the % change in M shows up in P; real output (Q) is unchanged by assumption — that IS long-run monetary neutrality. Velocity doesn't need to move; it's held fixed by the problem's setup. |
| 10 | Match | as above | Distractor-proofed: SRPC = short-run downward slope; LRPC = long-run vertical line; THE CLASSIC ERROR = conflating the two; neutrality = P moves, Q doesn't. |
Quantitative gate: PASS — every numeric answer re-computed: Q6 500×4/1000=2; Q7 before 300×5/1500=1, after 360×5/1500=1.2 (20% rise matching 20% money growth); Q9 10% money growth → 10% price-level growth, 0% real-output growth (neutrality).
Graph-logic check: PASS — every Phillips-curve claim verified against the NUMBERS_PACK canon: Q1/Q2 SRPC slopes down through (4%,6%) and (6%,2%); Q3 LRPC vertical at u*=5%; Q4 THE CLASSIC ERROR named and refuted; Q5 expected-inflation shift is up/right, not along the curve.
Quality gate (self-checked): every single-answer item has exactly one correct option; distractors target the named traps (SRPC slope direction flipped, LRPC misread as "inflation fixed" instead of "unemployment fixed," THE CLASSIC ERROR mistaken for a true statement, MV=PQ approximation confused with an exact law, real output mistakenly moving in the long run). No free numeric entry; no essay.
Blueprint note
Objective 8 (Phillips curve + quantity theory) · item types: 7 MC, 1 T/F, 1 multiple-answer, 1 matching · ≥1 curve-shift item (Q4, Q5) · ≥1 matching item (Q10) · ≥1 multiple-answer item (Q9) · ≥1 T/F item (Q8) · 2 fresh MV=PQ numeric items (Q6 anchor, Q7 fresh variant) alongside 3 Phillips-curve conceptual items (Q1–Q3) and THE CLASSIC ERROR applied item (Q4) and shift item (Q5).
Canvas placement block
canvas_object = Quiz
quiz_type = assignment
title = "Week 12 Quiz - Inflation, the Phillips Curve & Expectations"
assignment_group = "Quizzes"
points_possible = 10
allowed_attempts = 1
ai_policy = closed
due_offset_days = 6
published = true
qti_import = "F-quiz-week-12-qti.xml"
provenance = "~ Prof. Ashford's edition · Fall 2026 · built with thecoursemaker.com"
F-quiz-week-12-qti.xml) ships inside the course's .imscc package — it lands in the Canvas gradebook on import.~ Prof. Ashford's edition · Fall 2026 · built with thecoursemaker.com