Question 1

Which of the following can start a demand-pull inflation?

Accepted Answer

A)  an improvement in technology 
B)  a decrease in productivity 
C)  an increase in imports 
D)  None of the above can start a demand-pull inflation. 
A)  an improvement in technology 
B)  a decrease in productivity 
C)  an increase in imports 
D)  None of the above can start a demand-pull inflation.

Question 2

When the price level is rising and simultaneously real GDP is decreasing

Accepted Answer

A)  the natural unemployment rate increases. 
B)  stagflation occurs. 
C)  there is an expansionary gap. 
D)  the Fed has increased the discount rate. 
A)  the natural unemployment rate increases. 
B)  stagflation occurs. 
C)  there is an expansionary gap. 
D)  the Fed has increased the discount rate.

Question 3

Stagflation occurs when the SAS curve shifts leftward.

Accepted Answer

A) True 
 B)False

Question 4

The short-run Phillips curve is vertical at the natural unemployment rate.

Accepted Answer

A) True 
 B)False

Question 5

Inflation describes the event of increasing output and rising prices.

Accepted Answer

A) True 
 B)False

Question 6

The key difference between the new classical theory of the business cycle and the new Keynesian theory of the business cycle is that the new classical theory believes that ________ while the new Keynesian theory believes that ________.

Accepted Answer

A)  expected changes in aggregate demand will change real GDP; expected changes in aggregate demand will not change real GDP 
B)  only unexpected changes in aggregate demand will change real GDP; only expected changes in aggregate demand will change real GDP 
C)  only unexpected changes in aggregate demand will change real GDP; both expected and unexpected changes in aggregate demand will change real GDP 
D)  the short-run aggregate supply curve is horizontal; the short-run aggregate supply curve is vertical 
A)  expected changes in aggregate demand will change real GDP; expected changes in aggregate demand will not change real GDP 
B)  only unexpected changes in aggregate demand will change real GDP; only expected changes in aggregate demand will change real GDP 
C)  only unexpected changes in aggregate demand will change real GDP; both expected and unexpected changes in aggregate demand will change real GDP 
D)  the short-run aggregate supply curve is horizontal; the short-run aggregate supply curve is vertical

Question 7

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

Accepted Answer

A)  a decrease in the demand for labor. 
B)  a decrease in investment demand. 
C)  a rise in the real wage rate. 
D)  a fall in the real interest rate. 
A)  a decrease in the demand for labor. 
B)  a decrease in investment demand. 
C)  a rise in the real wage rate. 
D)  a fall in the real interest rate.

Question 8

A one-time increase in the price of oil followed by a one-time increase in aggregate demand produces

Accepted Answer

A)  continuing cost-push inflation. 
B)  continuing demand-pull inflation. 
C)  a one-time decrease in the price level. 
D)  a one-time increase in the price level. 
A)  continuing cost-push inflation. 
B)  continuing demand-pull inflation. 
C)  a one-time decrease in the price level. 
D)  a one-time increase in the price level.

Question 9

The monetarist theory of the business cycle views fluctuations in the growth rate of the quantity of money as the main source of economic fluctuations.

Accepted Answer

A) True 
 B)False

Question 10

Explain how the expected inflation rate affects the short-run Phillips curve. Be sure to mention the role played by the money wage rate.

Accepted Answer

When the expected inflation rate falls,

Question 11

When there is a cost-push inflation

Accepted Answer

A)  workers demand higher money wages because of higher price levels. 
B)  the short-run aggregate supply curve shifts rightward. 
C)  the aggregate demand curve shifts leftward because of the cost hikes. 
D)  None of the above answers is correct. 
A)  workers demand higher money wages because of higher price levels. 
B)  the short-run aggregate supply curve shifts rightward. 
C)  the aggregate demand curve shifts leftward because of the cost hikes. 
D)  None of the above answers is correct.

Question 12

Cost-push inflation starts with

Accepted Answer

A)  an increase in aggregate demand. 
B)  a decrease in aggregate demand. 
C)  an increase in short-run aggregate supply. 
D)  a decrease in short-run aggregate supply. 
A)  an increase in aggregate demand. 
B)  a decrease in aggregate demand. 
C)  an increase in short-run aggregate supply. 
D)  a decrease in short-run aggregate supply.

Question 13

Which of the following leads to a downward shift in the short-run Phillips curve?

Accepted Answer

A)  People expected inflation to be 5 percent last year and now expect inflation to be 3 percent this year. 
B)  People expect the unemployment rate to increase. 
C)  The long-run Phillips curve shifts rightward. 
D)  Unexpected inflation increases. 
A)  People expected inflation to be 5 percent last year and now expect inflation to be 3 percent this year. 
B)  People expect the unemployment rate to increase. 
C)  The long-run Phillips curve shifts rightward. 
D)  Unexpected inflation increases.

Question 14

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

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  both Figure A and Figure B 
D)  neither Figure A nor Figure B 
A)  Figure A 
B)  Figure B 
C)  both Figure A and Figure B 
D)  neither Figure A nor Figure B

Question 15

Describe how a demand-pull inflation can occur.

Accepted Answer

Demand-pull inflation starts from an ini

Question 16

-In the above figure, suppose that the economy is at point A. An unexpected increase in the inflation rate to 6 percent will result in a movement to point

Accepted Answer

A)  A, that is, there is no movement. 
B)  B. 
C)  C. 
D)  D. 
A)  A, that is, there is no movement. 
B)  B. 
C)  C. 
D)  D.

Question 17

Increases in government expenditure can create cost-push inflation.

Accepted Answer

A) True 
 B)False

Question 18

-In the above figure, the economy is initially at point A. According to the monetarists, which point best represents the consequence of a short-run response to a decrease in the growth rate of the quantity of money?

Accepted Answer

A)  A, that is, there is no change. 
B)  B 
C)  C 
D)  D 
A)  A, that is, there is no change. 
B)  B 
C)  C 
D)  D

Question 19

Which of the following describes the Keynesian approach to the business cycle?
I. Unanticipated shocks to aggregate supply drive expansions and recessions.
II. The Keynesian theory is a real business cycle model of the economy.
III. A decrease in business confidence can trigger a recession.

Accepted Answer

A)  I only 
B)  III only 
C)  I and II 
D)  II and III 
A)  I only 
B)  III only 
C)  I and II 
D)  II and III

Question 20

The Cleveland Federal Reserve Bank's estimate of expected inflation has fallen from 3.5 percent in 2000 to 1.5 percent in 2013. This fall means that

Accepted Answer

A)  the long-run Phillips curve shifted leftward. 
B)  the long-run Phillips curve shifted rightward. 
C)  the long-run Phillips curve shifted downward. 
D)  None of the above answers are correct because a change in the expected inflation rate does not shift the long-run Phillips curve. 
A)  the long-run Phillips curve shifted leftward. 
B)  the long-run Phillips curve shifted rightward. 
C)  the long-run Phillips curve shifted downward. 
D)  None of the above answers are correct because a change in the expected inflation rate does not shift the long-run Phillips curve.

Which of the following can start a demand-pull inflation?

When the price level is rising and simultaneously real GDP is decreasing

Stagflation occurs when the SAS curve shifts leftward.

The short-run Phillips curve is vertical at the natural unemployment rate.

Inflation describes the event of increasing output and rising prices.

The key difference between the new classical theory of the business cycle and the new Keynesian theory of the business cycle is that the new classical theory believes that while the new Keynesian theory believes that .

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

A one-time increase in the price of oil followed by a one-time increase in aggregate demand produces

The monetarist theory of the business cycle views fluctuations in the growth rate of the quantity of money as the main source of economic fluctuations.

Explain how the expected inflation rate affects the short-run Phillips curve. Be sure to mention the role played by the money wage rate.

When there is a cost-push inflation

Cost-push inflation starts with

Which of the following leads to a downward shift in the short-run Phillips curve?

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

Describe how a demand-pull inflation can occur.

-In the above figure, suppose that the economy is at point A. An unexpected increase in the inflation rate to 6 percent will result in a movement to point

Increases in government expenditure can create cost-push inflation.

-In the above figure, the economy is initially at point A. According to the monetarists, which point best represents the consequence of a short-run response to a decrease in the growth rate of the quantity of money?

Which of the following describes the Keynesian approach to the business cycle? I. Unanticipated shocks to aggregate supply drive expansions and recessions. II. The Keynesian theory is a real business cycle model of the economy. III. A decrease in business confidence can trigger a recession.

The Cleveland Federal Reserve Bank's estimate of expected inflation has fallen from 3.5 percent in 2000 to 1.5 percent in 2013. This fall means that

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 12: The Business Cycle, Inflation, and Deflation

Which of the following can start a demand-pull inflation?

When the price level is rising and simultaneously real GDP is decreasing

Stagflation occurs when the SAS curve shifts leftward.

The short-run Phillips curve is vertical at the natural unemployment rate.

Inflation describes the event of increasing output and rising prices.

The key difference between the new classical theory of the business cycle and the new Keynesian theory of the business cycle is that the new classical theory believes that ________ while the new Keynesian theory believes that ________.

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

A one-time increase in the price of oil followed by a one-time increase in aggregate demand produces

The monetarist theory of the business cycle views fluctuations in the growth rate of the quantity of money as the main source of economic fluctuations.

Explain how the expected inflation rate affects the short-run Phillips curve. Be sure to mention the role played by the money wage rate.

When there is a cost-push inflation

Cost-push inflation starts with

Which of the following leads to a downward shift in the short-run Phillips curve?

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

Describe how a demand-pull inflation can occur.

-In the above figure, suppose that the economy is at point A. An unexpected increase in the inflation rate to 6 percent will result in a movement to point

Increases in government expenditure can create cost-push inflation.

-In the above figure, the economy is initially at point A. According to the monetarists, which point best represents the consequence of a short-run response to a decrease in the growth rate of the quantity of money?

Which of the following describes the Keynesian approach to the business cycle? I. Unanticipated shocks to aggregate supply drive expansions and recessions. II. The Keynesian theory is a real business cycle model of the economy. III. A decrease in business confidence can trigger a recession.

The Cleveland Federal Reserve Bank's estimate of expected inflation has fallen from 3.5 percent in 2000 to 1.5 percent in 2013. This fall means that

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

The key difference between the new classical theory of the business cycle and the new Keynesian theory of the business cycle is that the new classical theory believes that while the new Keynesian theory believes that .