Question 1

In a demand-pull inflation brought about by increases in the quantity of money, real GDP might increase temporarily because

Accepted Answer

A)  tax rates decline. 
B)  real wages fall. 
C)  money wages fall. 
D)  real wages rise. 
A)  tax rates decline. 
B)  real wages fall. 
C)  money wages fall. 
D)  real wages rise.

Question 2

-In the above figure, suppose the economy starts at point A. The short-run response to an increase in the growth rate of the quantity of money in the monetarist business cycle theory is for the price level to ________ and real GDP to ________.

Accepted Answer

A)  fall to 90; remain at $18 trillion 
B)  rise to 120; increase to $19 trillion 
C)  rise to 130; remain at $18 trillion 
D)  remain at 110; remain at $18 trillion 
A)  fall to 90; remain at $18 trillion 
B)  rise to 120; increase to $19 trillion 
C)  rise to 130; remain at $18 trillion 
D)  remain at 110; remain at $18 trillion

Question 3

Phillips curves describe the relationship between

Accepted Answer

A)  aggregate expenditures and aggregate demand. 
B)  the quantity of money and interest rates. 
C)  unemployment and inflation. 
D)  aggregate demand and the price level. 
A)  aggregate expenditures and aggregate demand. 
B)  the quantity of money and interest rates. 
C)  unemployment and inflation. 
D)  aggregate demand and the price level.

Question 4

-In the above figure, which path represents a cost-push inflation?

Accepted Answer

A)  point A to C to D to F to G 
B)  point A to B to D to E to G 
C)  point A to C to D to E to G 
D)  point A to B to D to F to G 
A)  point A to C to D to F to G 
B)  point A to B to D to E to G 
C)  point A to C to D to E to G 
D)  point A to B to D to F to G

Question 5

If Samantha predicts future inflation based on rational expectations, then

Accepted Answer

A)  her forecast of inflation will always be correct. 
B)  she uses all relevant information to forecast inflation. 
C)  she looks only to the past to help her predict future inflation. 
D)  she never under estimates inflation. 
A)  her forecast of inflation will always be correct. 
B)  she uses all relevant information to forecast inflation. 
C)  she looks only to the past to help her predict future inflation. 
D)  she never under estimates inflation.

Question 6

Suppose that the expected inflation rate is 12 percent and the unemployment rate is 5 percent. If the expected inflation rate increases to 13 percent, then

Accepted Answer

A)  the short-run Phillips curve will shift upward. 
B)  the short-run Phillips curve will shift downward. 
C)  there will be a movement along the short-run Phillips curve. 
D)  the natural unemployment rate will rise. 
A)  the short-run Phillips curve will shift upward. 
B)  the short-run Phillips curve will shift downward. 
C)  there will be a movement along the short-run Phillips curve. 
D)  the natural unemployment rate will rise.

Question 7

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

Accepted Answer

A)  shifted rightward. 
B)  shifted leftward. 
C)  not shifted. 
D)  None of the above answers are correct because the effect on the short-run Phillips curve is ambiguous. 
A)  shifted rightward. 
B)  shifted leftward. 
C)  not shifted. 
D)  None of the above answers are correct because the effect on the short-run Phillips curve is ambiguous.

Question 8

An unexpected decrease in aggregate demand will trigger a recession in the ________ theory of the business cycle.

Accepted Answer

A)  new Keynesian cycle 
B)  new classical cycle 
C)  real business cycle 
D)  Both answers A and B are correct. 
A)  new Keynesian cycle 
B)  new classical cycle 
C)  real business cycle 
D)  Both answers A and B are correct.

Question 9

The factor leading to business cycles according to the real business cycle theory is changes in

Accepted Answer

A)  the growth rate of the quantity of money. 
B)  technological change caused by changes in productivity. 
C)  productivity caused by changes in technology. 
D)  investment caused by changes in business confidence. 
A)  the growth rate of the quantity of money. 
B)  technological change caused by changes in productivity. 
C)  productivity caused by changes in technology. 
D)  investment caused by changes in business confidence.

Question 10

The short-run Phillips curve shows a

Accepted Answer

A)  positive relationship between the quantity of money and interest rates. 
B)  positive relationship between the price level and real GDP. 
C)  negative relationship between interest rates and the price level. 
D)  negative relationship between the unemployment rate and the inflation rate. 
A)  positive relationship between the quantity of money and interest rates. 
B)  positive relationship between the price level and real GDP. 
C)  negative relationship between interest rates and the price level. 
D)  negative relationship between the unemployment rate and the inflation rate.

Question 11

Phillips curves show the relationship between the

Accepted Answer

A)  nominal interest rate and the real interest rate. 
B)  expected rate of inflation and the nominal interest rate. 
C)  real interest rate and the unemployment rate. 
D)  unemployment rate and the inflation rate. 
A)  nominal interest rate and the real interest rate. 
B)  expected rate of inflation and the nominal interest rate. 
C)  real interest rate and the unemployment rate. 
D)  unemployment rate and the inflation rate.

Question 12

-Using the above figure as a starting point, a recession in the monetarist model would begin with a

Accepted Answer

A)  rightward shift in the AD curve. 
B)  leftward shift in the AD curve. 
C)  leftward shift in the SAS curve. 
D)  leftward shift in the LAS curve. 
A)  rightward shift in the AD curve. 
B)  leftward shift in the AD curve. 
C)  leftward shift in the SAS curve. 
D)  leftward shift in the LAS curve.

Question 13

A demand-pull inflation occurred in the United States during most of the later part of the

Accepted Answer

A)  1960s. 
B)  2000s. 
C)  1980s. 
D)  1990s. 
A)  1960s. 
B)  2000s. 
C)  1980s. 
D)  1990s.

Question 14

Suppose that the economy is at full employment and aggregate demand increases by more than it is anticipated to increase. Other things remaining the same,

Accepted Answer

A)  long-run aggregate supply decreases. 
B)  real GDP remains at potential GDP. 
C)  real GDP increases above potential GDP. 
D)  real GDP decreases below potential GDP. 
A)  long-run aggregate supply decreases. 
B)  real GDP remains at potential GDP. 
C)  real GDP increases above potential GDP. 
D)  real GDP decreases below potential GDP.

Question 15

In the monetarist business cycle theory, the factor leading to a business cycle is changes in

Accepted Answer

A)  consumer spending. 
B)  investment spending. 
C)  the growth rate of the quantity of money. 
D)  net exports. 
A)  consumer spending. 
B)  investment spending. 
C)  the growth rate of the quantity of money. 
D)  net exports.

Question 16

Which theory maintains that the money wage rate always adjusts freely?

Accepted Answer

A)  Keynesian cycle theory 
B)  monetarist cycle theory 
C)  both the new classical cycle theory and the new Keynesian cycle theory 
D)  real business cycle theory 
A)  Keynesian cycle theory 
B)  monetarist cycle theory 
C)  both the new classical cycle theory and the new Keynesian cycle theory 
D)  real business cycle theory

Question 17

What is a cost-push inflation?

Accepted Answer

A cost-push inflation is an in

Question 18

In April 2008 the price of oil was approximately $130 per barrel; in April 2017, it was approximately $50 per barrel. This change in the price of oil could have started

Accepted Answer

A)  a cost-push inflation. 
B)  a demand-pull inflation. 
C)  both a cost-push and a demand-pull inflation. 
D)  None of the above answers are correct. 
A)  a cost-push inflation. 
B)  a demand-pull inflation. 
C)  both a cost-push and a demand-pull inflation. 
D)  None of the above answers are correct.

Question 19

The real business cycle theory views fluctuations in productivity as the main source of business cycles.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D

In a demand-pull inflation brought about by increases in the quantity of money, real GDP might increase temporarily because

-In the above figure, suppose the economy starts at point A. The short-run response to an increase in the growth rate of the quantity of money in the monetarist business cycle theory is for the price level to and real GDP to .

Phillips curves describe the relationship between

-In the above figure, which path represents a cost-push inflation?

If Samantha predicts future inflation based on rational expectations, then

Suppose that the expected inflation rate is 12 percent and the unemployment rate is 5 percent. If the expected inflation rate increases to 13 percent, then

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

An unexpected decrease in aggregate demand will trigger a recession in the ________ theory of the business cycle.

The factor leading to business cycles according to the real business cycle theory is changes in

The short-run Phillips curve shows a

Phillips curves show the relationship between the

-Using the above figure as a starting point, a recession in the monetarist model would begin with a

A demand-pull inflation occurred in the United States during most of the later part of the

Suppose that the economy is at full employment and aggregate demand increases by more than it is anticipated to increase. Other things remaining the same,

In the monetarist business cycle theory, the factor leading to a business cycle is changes in

Which theory maintains that the money wage rate always adjusts freely?

What is a cost-push inflation?

In April 2008 the price of oil was approximately $130 per barrel; in April 2017, it was approximately $50 per barrel. This change in the price of oil could have started

The real business cycle theory views fluctuations in productivity as the main source of business cycles.

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

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

In a demand-pull inflation brought about by increases in the quantity of money, real GDP might increase temporarily because

-In the above figure, suppose the economy starts at point A. The short-run response to an increase in the growth rate of the quantity of money in the monetarist business cycle theory is for the price level to ________ and real GDP to ________.

Phillips curves describe the relationship between

-In the above figure, which path represents a cost-push inflation?

If Samantha predicts future inflation based on rational expectations, then

Suppose that the expected inflation rate is 12 percent and the unemployment rate is 5 percent. If the expected inflation rate increases to 13 percent, then

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

An unexpected decrease in aggregate demand will trigger a recession in the ________ theory of the business cycle.

The factor leading to business cycles according to the real business cycle theory is changes in

The short-run Phillips curve shows a

Phillips curves show the relationship between the

-Using the above figure as a starting point, a recession in the monetarist model would begin with a

A demand-pull inflation occurred in the United States during most of the later part of the

Suppose that the economy is at full employment and aggregate demand increases by more than it is anticipated to increase. Other things remaining the same,

In the monetarist business cycle theory, the factor leading to a business cycle is changes in

Which theory maintains that the money wage rate always adjusts freely?

What is a cost-push inflation?

In April 2008 the price of oil was approximately $130 per barrel; in April 2017, it was approximately $50 per barrel. This change in the price of oil could have started

The real business cycle theory views fluctuations in productivity as the main source of business cycles.

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

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

-In the above figure, suppose the economy starts at point A. The short-run response to an increase in the growth rate of the quantity of money in the monetarist business cycle theory is for the price level to and real GDP to .