Exam 12: The Business Cycle, Inflation, and Deflation

The intertemporal substitution effect is the factor that creates business cycles in the Keynesian theory of the business cycle.

In a demand-pull inflation, money wage rates rise because

"All for One, but None for All" In an article regarding how Great Britain and France are addressing the economic crisis in 2008, Britain's prime minister "is eager to encourage consumer spending" while France's president "wants to boost investment in both the private and public sectors." Both leaders are concerned because "hardly a day goes by without some manufacturing company announcing painful restructuring, plant closures or temporary lay-offs." Www)ft.com, 11/24/2008 If the governments can increase consumption or investment while holding the expected inflation constant, there would be

Suppose that the money prices of raw materials increase so that the short-run aggregate supply decreases. If the Federal Reserve does not respond, the higher money price of raw materials will I. repeatedly shift the aggregate demand curve rightward and raise the price level. II. shift the aggregate demand curve rightward and the aggregate supply curve leftward, raising prices. III. result initially in lower employment and a higher price level.

As world economies recover from the financial crisis in 2008 and 2009, the U.S. economy returns to full employment and expected inflation equals actual inflation

Which of the following leads to a rightward shift in the short-run Phillips curve? I. a reduction in the expected inflation rate II. an increase in the natural unemployment rate

Demand-pull inflation is an inflation that results from an initial

What are sources that can start a demand-pull inflation?

In real business cycle theory, the factor leading to a business cycle is represented by

New Keynesian economists believe that ________ is influenced by ________.

What is demand-pull inflation?

The long-run Phillips curve shows the relationship between the inflation rate and the unemployment rate when the

The factor leading to business cycles in the Keynesian model is

-In the above figure, suppose that the economy is at point A when foreign countries begin an expansion and buy more U.S.-made goods. In the short run, this change creates a movement to point ________ and afterwards an eventual increase in ________.

Which of the following theories is criticized for assuming the money wage rate is not sticky?

Which of the following is a change that would NOT start a demand-pull inflation?

Demand-pull inflation starts as the

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

A decrease in the expected inflation rate shifts the short-run Phillips curve

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.