Exam 12: The Business Cycle, Inflation, and Deflation

The new classical cycle theory predicts that an unexpected increase in aggregate demand ________ create a business cycle and an expected increase in aggregate demand ________ create a business cycle.

The factor leading to business cycles in the real business cycle theory is represented by changes in the growth rate of

-In the above, which figure shows the start of a cost-push inflation?

An economy is in long-run equilibrium and the price level is 100 in the figure above. Aggregate demand increases and the aggregate demand curve shifts to AD₁. If the increase in aggregate demand is expected, then the inflation rate is

For a persistent cost-push inflation to occur, the Fed must persistently increase the quantity of money.

-In the above figure, suppose that the economy is at point C. If the inflation rate is lower than expected,

A change in the natural unemployment rate

-Which of the above figures best shows the start of a demand-pull inflation?

-In the above figure, the economy initially is at point A and then an increase in the quantity of money moves the economy to point D. At point D, the real wage rate has

If oil prices increase, then in the short run, real GDP will ________ and the price level will ________.

-In the above figure, suppose that the economy has moved from point A to point C. According to the monetarist theory of the business cycle, what could have caused this movement?

An initial increase in aggregate demand that is NOT followed by an increase in the quantity of money results in a long-run equilibrium with

The data below show data for Germany including real GDP (in billions of euros) and the price level. In which of the following year(s) did Germany experience inflation?

One model of the business cycle claims that volatile business confidence is the primary factor in starting a business cycle. This model is the

A one-time increase in aggregate demand creates inflation.

"UK Inflation Surges to 16-year High" According to the story, "High inflation in July will also lead to ... "further rises next January ..." Economists also noted that inflation may get worse because the current data did not yet include "announced rises in gas and electricity prices." Www)ft.com, 8/12/2008 The story reflects the concept of

If the Fed responds to repeated decreases in the short-run aggregate supply with repeated increases in the quantity of money, the economy will be faced with

The Cleveland Federal Reserve Bank estimates the expected inflation rate is 1.5 percent in 2013. This estimate means that

By itself, a fall in the price of oil shifts the

According to the real business cycle theory, technological change