Exam 12: The Business Cycle, Inflation, and Deflation

-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. If the quantity of money remains constant, the economy will adjust with the

If the economy is at potential GDP and the Fed increases the quantity of money, then

What was the U.S. experience with demand pull inflation during the 1960s and early 1970s?

Business cycle events that arise solely from aggregate demand shifts are emphasized by the

An increase in the natural unemployment rate shifts both the long-run Phillips curve and the short-run Phillips curve rightward.

Which of the diagrams in the above figure best illustrates a long-run Phillips curve?

-In the above figure, the economy is at point A. The inflation rate falls by two percentage points and people correctly expected the fall. As a result, the economy moves to point

What is the impulse that leads to business cycle in the real business cycle, RBC, theory?

Suppose that the Federal Reserve is expected to expand the quantity of money by 5 percent but ends up expanding it by only 2 percent. If the new Keynesian theory is CORRECT, which of the following describes the effect on the economy?

What are criticisms of the real business cycle theory?

The government estimates that the natural unemployment rate has increased from 4.8 percent in 2006 to 5.2 percent in late 2012. If these estimates are accurate, the short-run Phillips curve has shifted ________ and the long-run Phillips curve has shifted ________.

Demand-pull inflation could start with

Suppose the velocity of circulation increases by 2 percent and potential GDP grows by 4 percent. The trend inflation rate will equal zero if the quantity of money grows by

When Japan experienced deflation in the 1990s and 2000s, Japan's

If the real interest rate is 2 percent and workers expect real wages to be 4 percent higher next year, according to the real business cycle theory, workers will work

According to the real business cycle (RBC) theory, recessions are the result of

Suppose the growth rate of the quantity of money increased from 5 percent per year to 8 percent per year. According to the ________, this event would trigger a business cycle expansion.

Cost-push inflation can be started by

To stop a demand-pull inflation using monetary policy, you would recommend that the Fed

Which of the following is the factor that leads to business cycles in the Keynesian business cycle theory?