Exam 12: The Business Cycle, Inflation, and Deflation

Use the information below to answer the following questions. Fact 12.4.1 The Reserve Bank of New Zealand signed an agreement with the New Zealand government in which the Bank agreed to main inflation inside a low target range.Failure to achieve the target would result in the governor of the Bank losing his job. -Consider Fact 12.4.1.Choose the correct statement.

The short- run Phillips curve shows the relationship between

Use the figure below to answer the following questions. Figure 12.2.2 -Refer to Figure 12.2.2.The economy is in long- run equilibrium.If the short- run aggregate supply curve shifts leftward from SAS₀ to SAS₁, ceteris paribus, then the actual inflation rate

In real business cycle theory, a decrease in productivity leads to all of the following events except

If there is a fully anticipated increase in the inflation rate,

If the natural unemployment rate increases, the long- run Phillips curve _______, the short- run Phillips curve _______, and the expected inflation rate _______ .

A forecast that is based on all the relevant information available is

According to _______, the business cycle is the result of aggregate demand growing at a fluctuating rate.

For a given expected inflation rate, the higher the unemployment rate, the lower is the actual inflation rate.This relationship is the _______ Phillips curve.When the expected inflation rate changes, this is shown as a movement along the _______ Phillips curve.

Along the short- run Phillips curve, if the actual unemployment rate falls below the natural unemployment rate, the

Along the short- run Phillips curve, everything remaining the same, the higher the

Suppose the economy is in long- run equilibrium when the price of oil rises.Which one of the following is not a short- run effect of this situation?

"Intertemporal substitution" in real business cycle theory refers to the change in the _______ as a result of the change in the real interest rate.

The factor leading to business cycles in the _______ cycle theory is unexpected fluctuations in aggregate demand while in the _______ cycle theory both unexpected and expected fluctuations in aggregate demand are factors that lead to business cycles.

Which business cycle theory emphasizes that, because of previously negotiated wage agreements, both expected and unexpected fluctuations in aggregate demand can change real GDP?

In the Keynesian business cycle theory, business cycles begin with a change in

In real business cycle theory, the supply of labour

Use the figure below to answer the following question. Figure 12.2.4 -Refer to Figure 12.2.4.The figure illustrates an economy initially in equilibrium at point A.If the quantity of money is expected to increase by 50 percent, what is the rational expectation of the price level?

The economy starts out at a full- employment equilibrium.Some events then occur that generate a cost- push inflation.Which of the following events might start a cost- push inflation?

According to _______ theory, a decrease in productivity growth shifts the _______.