Question 1

A cost-push inflation spiral results if the Fed's response to stagflation is to keep

Accepted Answer

A)  decreasing aggregate demand. 
B)  decreasing aggregate supply. 
C)  increasing aggregate demand. 
D)  increasing aggregate supply. 
A)  decreasing aggregate demand. 
B)  decreasing aggregate supply. 
C)  increasing aggregate demand. 
D)  increasing aggregate supply.

Question 2

Demand-pull 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 3

Both new Keynesian and new classical cycle theories claim that

Accepted Answer

A)  animal spirits can trigger a business cycle. 
B)  shifts in the SAS curve are the main impulse for a business cycle. 
C)  unexpected changes in aggregate demand trigger a business cycle. 
D)  expected changes in the quantity of money can trigger a business cycle. 
A)  animal spirits can trigger a business cycle. 
B)  shifts in the SAS curve are the main impulse for a business cycle. 
C)  unexpected changes in aggregate demand trigger a business cycle. 
D)  expected changes in the quantity of money can trigger a business cycle.

Question 4

Oil prices increase sharply, raising the price level and decreasing real GDP. The Fed has an incentive to

Accepted Answer

A)  increase the quantity of money in order to reduce unemployment. 
B)  decrease the quantity of money in order to reduce unemployment. 
C)  increase the quantity of money in order to reduce the price level. 
D)  increase the quantity of money in order to reduce the price level and unemployment. 
A)  increase the quantity of money in order to reduce unemployment. 
B)  decrease the quantity of money in order to reduce unemployment. 
C)  increase the quantity of money in order to reduce the price level. 
D)  increase the quantity of money in order to reduce the price level and unemployment.

Question 5

According to the real business cycle (RBC) theory, during a recession the demand for labor ________ and the supply of labor ________.

Accepted Answer

A)  increases; decreases 
B)  decreases; does not change 
C)  does not change; decreases 
D)  decreases; decreases 
A)  increases; decreases 
B)  decreases; does not change 
C)  does not change; decreases 
D)  decreases; decreases

Question 6

When the AD and SAS curves intersect at a level of real GDP which exceeds potential GDP and there is no government policy undertaken, which of the following will occur?

Accepted Answer

A)  The AD curve shifts rightward because the Fed decreases the money supply. 
B)  The SAS curve shifts leftward because the money wage rate rises. 
C)  The SAS curve shifts leftward because the money wage rate falls. 
D)  The AD curve shifts leftward because the money wage rate rises. 
A)  The AD curve shifts rightward because the Fed decreases the money supply. 
B)  The SAS curve shifts leftward because the money wage rate rises. 
C)  The SAS curve shifts leftward because the money wage rate falls. 
D)  The AD curve shifts leftward because the money wage rate rises.

Question 7

-In the above figure, the economy is at point A. An increase in money wage rates that sets off a cost-push inflation will initially move the economy from point A to point

Accepted Answer

A)  A, that is, the economy does not change. 
B)  B. 
C)  C. 
D)  D. 
A)  A, that is, the economy does not change. 
B)  B. 
C)  C. 
D)  D.

Question 8

The short-run Phillips curve shows the ________ relationship between ________.

Accepted Answer

A)  negative; unemployment and real GDP 
B)  positive; unemployment and real GDP 
C)  negative; inflation and unemployment 
D)  positive; real GDP and inflation 
A)  negative; unemployment and real GDP 
B)  positive; unemployment and real GDP 
C)  negative; inflation and unemployment 
D)  positive; real GDP and inflation

Question 9

The Keynesian explanation of the business cycle rests on several concepts, including

Accepted Answer

A)  rigid money wage rates. 
B)  unstable monetary policy by the Fed. 
C)  shocks to the rate of technological change. 
D)  the desire of politicians to be re-elected. 
A)  rigid money wage rates. 
B)  unstable monetary policy by the Fed. 
C)  shocks to the rate of technological change. 
D)  the desire of politicians to be re-elected.

A cost-push inflation spiral results if the Fed's response to stagflation is to keep

Demand-pull inflation starts with

Both new Keynesian and new classical cycle theories claim that

Oil prices increase sharply, raising the price level and decreasing real GDP. The Fed has an incentive to

According to the real business cycle (RBC) theory, during a recession the demand for labor and the supply of labor .

When the AD and SAS curves intersect at a level of real GDP which exceeds potential GDP and there is no government policy undertaken, which of the following will occur?

-In the above figure, the economy is at point A. An increase in money wage rates that sets off a cost-push inflation will initially move the economy from point A to point

The short-run Phillips curve shows the relationship between .

The Keynesian explanation of the business cycle rests on several concepts, including

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

A cost-push inflation spiral results if the Fed's response to stagflation is to keep

Demand-pull inflation starts with

Both new Keynesian and new classical cycle theories claim that

Oil prices increase sharply, raising the price level and decreasing real GDP. The Fed has an incentive to

According to the real business cycle (RBC) theory, during a recession the demand for labor ________ and the supply of labor ________.

When the AD and SAS curves intersect at a level of real GDP which exceeds potential GDP and there is no government policy undertaken, which of the following will occur?

-In the above figure, the economy is at point A. An increase in money wage rates that sets off a cost-push inflation will initially move the economy from point A to point

The short-run Phillips curve shows the ________ relationship between ________.

The Keynesian explanation of the business cycle rests on several concepts, including

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

According to the real business cycle (RBC) theory, during a recession the demand for labor and the supply of labor .

The short-run Phillips curve shows the relationship between .