Question 1

Which of the following is NOT a potential start of a demand-pull inflation?

Accepted Answer

A)  an increase in the money wage rate 
B)  an increase in the quantity of money 
C)  an increase in government expenditure 
D)  an increase in exports 
A)  an increase in the money wage rate 
B)  an increase in the quantity of money 
C)  an increase in government expenditure 
D)  an increase in exports

Question 2

The ________ states that the main source of economic fluctuations is volatile business confidence.

Accepted Answer

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

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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 short-run Phillips curve shifted upward. 
B)  the short-run Phillips curve shifted downward. 
C)  there was a movement along the short-run Phillips curve. 
D)  the natural unemployment rate increased. 
A)  the short-run Phillips curve shifted upward. 
B)  the short-run Phillips curve shifted downward. 
C)  there was a movement along the short-run Phillips curve. 
D)  the natural unemployment rate increased.

Question 5

What is the factor that leads to business cycles in the new Keynesian cycle theory?

Accepted Answer

The major factor in the new Ke

Question 6

In 2008, when a recession started, the growth of government expenditures on goods and services doubled compared to its growth in 2007. According to the aggregate demand theories of the business cycle

Accepted Answer

A)  government expenditure was at least a partial cause of the recession. 
B)  government expenditure was not a cause of the recession. 
C)  government expenditure was definitely the cause of the recession. 
D)  None of the above answers are correct because aggregate demand theories of the business cycle focus only on investment and consumption expenditure. 
A)  government expenditure was at least a partial cause of the recession. 
B)  government expenditure was not a cause of the recession. 
C)  government expenditure was definitely the cause of the recession. 
D)  None of the above answers are correct because aggregate demand theories of the business cycle focus only on investment and consumption expenditure.

Question 7

Increases in the prices of raw materials can create cost-push inflation.

Accepted Answer

A) True 
 B)False

Question 8

The business cycle impulse in the new classical theory of the business cycle is

Accepted Answer

A)  unexpected changes in aggregate demand. 
B)  expected changes in aggregate demand. 
C)  fluctuations in money growth with rigid wages. 
D)  fluctuations in investment coupled with rigid wages. 
A)  unexpected changes in aggregate demand. 
B)  expected changes in aggregate demand. 
C)  fluctuations in money growth with rigid wages. 
D)  fluctuations in investment coupled with rigid wages.

Question 9

Keynes used the term "animal spirits" to represent

Accepted Answer

A)  changes in people's consumption expenditures. 
B)  the ease of forecasting. 
C)  fluctuations in business confidence. 
D)  investment based on hard facts about the future. 
A)  changes in people's consumption expenditures. 
B)  the ease of forecasting. 
C)  fluctuations in business confidence. 
D)  investment based on hard facts about the future.

Question 10

-An economy's natural unemployment rate is 4 percent. The table above gives some points on the economy's short-run Phillips curve. When the unemployment rate is 4 percent

Accepted Answer

A)  actual inflation is greater than expected inflation. 
B)  actual inflation is less than expected inflation. 
C)  and the inflation rate is 6 percent a year, the short-run and long-run Phillips curves intersect. 
D)  and the expected inflation rate is 8 percent a year, the short-run Phillips curve shifts downward. 
A)  actual inflation is greater than expected inflation. 
B)  actual inflation is less than expected inflation. 
C)  and the inflation rate is 6 percent a year, the short-run and long-run Phillips curves intersect. 
D)  and the expected inflation rate is 8 percent a year, the short-run Phillips curve shifts downward.

Question 11

If the unemployment rate initially equals its natural rate, then if the inflation rate rises above its expected rate, the unemployment rate

Accepted Answer

A)  equals the natural rate. 
B)  remains constant. 
C)  falls below its natural rate. 
D)  rises above its natural rate. 
A)  equals the natural rate. 
B)  remains constant. 
C)  falls below its natural rate. 
D)  rises above its natural rate.

Question 12

Which of the following results in the aggregate demand curve shifting rightward year after year?

Accepted Answer

A)  a one-time tax cut 
B)  a one-time increase in government expenditures on goods and services 
C)  inflation 
D)  growth in the quantity of money 
A)  a one-time tax cut 
B)  a one-time increase in government expenditures on goods and services 
C)  inflation 
D)  growth in the quantity of money

Question 13

A higher price for oil shifts the

Accepted Answer

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

Question 14

In a demand-pull inflation, if the Fed stops expanding the quantity of money

Accepted Answer

A)  a cost-push inflation spiral will occur. 
B)  government expenditure will cause the demand-pull inflation to continue. 
C)  a deflation will occur. 
D)  the demand-pull inflation spiral ends. 
A)  a cost-push inflation spiral will occur. 
B)  government expenditure will cause the demand-pull inflation to continue. 
C)  a deflation will occur. 
D)  the demand-pull inflation spiral ends.

Question 15

For a given level of anticipated inflation and natural unemployment rate, the short-run Phillips curve shows the relationship between

Accepted Answer

A)  potential GDP and real GDP. 
B)  real GDP growth and the unemployment rate. 
C)  inflation and money growth. 
D)  inflation and the unemployment rate. 
A)  potential GDP and real GDP. 
B)  real GDP growth and the unemployment rate. 
C)  inflation and money growth. 
D)  inflation and the unemployment rate.

Question 16

Which of the following could lead to demand-pull inflation?

Accepted Answer

A)  an increase in the money wage rate 
B)  an increase in the quantity of money 
C)  a decrease in exports 
D)  an increase in oil prices 
A)  an increase in the money wage rate 
B)  an increase in the quantity of money 
C)  a decrease in exports 
D)  an increase in oil prices

Question 17

What is the factor that leads to business cycles in the monetarist cycle theory?

Accepted Answer

The factor leading to business

Question 18

The main sources of cost-push inflation are increases in

Accepted Answer

A)  money wage rates and the cost of raw materials. 
B)  real wage rates and the cost of raw materials. 
C)  money wage rates and aggregate demand. 
D)  aggregate demand and real wage rates. 
A)  money wage rates and the cost of raw materials. 
B)  real wage rates and the cost of raw materials. 
C)  money wage rates and aggregate demand. 
D)  aggregate demand and real wage rates.

Question 19

A decrease in the expected inflation rate leads to ________ in the long-run Phillips curve and ________ in the short-run Phillips curve.

Accepted Answer

A)  an upward shift; no shift 
B)  a leftward shift; an upward shift 
C)  no shift; no shift 
D)  no shift; a downward shift 
A)  an upward shift; no shift 
B)  a leftward shift; an upward shift 
C)  no shift; no shift 
D)  no shift; a downward shift

Question 20

The short-run Phillips curve intersects the long-run Phillips curve at the

Accepted Answer

A)  natural interest rate. 
B)  nominal interest rate. 
C)  natural inflation rate. 
D)  expected inflation rate. 
A)  natural interest rate. 
B)  nominal interest rate. 
C)  natural inflation rate. 
D)  expected inflation rate.

Which of the following is NOT a potential start of a demand-pull inflation?

The ________ states that the main source of economic fluctuations is volatile business confidence.

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

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 the factor that leads to business cycles in the new Keynesian cycle theory?

In 2008, when a recession started, the growth of government expenditures on goods and services doubled compared to its growth in 2007. According to the aggregate demand theories of the business cycle

Increases in the prices of raw materials can create cost-push inflation.

The business cycle impulse in the new classical theory of the business cycle is

Keynes used the term "animal spirits" to represent

-An economy's natural unemployment rate is 4 percent. The table above gives some points on the economy's short-run Phillips curve. When the unemployment rate is 4 percent

If the unemployment rate initially equals its natural rate, then if the inflation rate rises above its expected rate, the unemployment rate

Which of the following results in the aggregate demand curve shifting rightward year after year?

A higher price for oil shifts the

In a demand-pull inflation, if the Fed stops expanding the quantity of money

For a given level of anticipated inflation and natural unemployment rate, the short-run Phillips curve shows the relationship between

Which of the following could lead to demand-pull inflation?

What is the factor that leads to business cycles in the monetarist cycle theory?

The main sources of cost-push inflation are increases in

A decrease in the expected inflation rate leads to in the long-run Phillips curve and in the short-run Phillips curve.

The short-run Phillips curve intersects the long-run Phillips curve at the

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 is NOT a potential start of a demand-pull inflation?

The ________ states that the main source of economic fluctuations is volatile business confidence.

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

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 the factor that leads to business cycles in the new Keynesian cycle theory?

In 2008, when a recession started, the growth of government expenditures on goods and services doubled compared to its growth in 2007. According to the aggregate demand theories of the business cycle

Increases in the prices of raw materials can create cost-push inflation.

The business cycle impulse in the new classical theory of the business cycle is

Keynes used the term "animal spirits" to represent

-An economy's natural unemployment rate is 4 percent. The table above gives some points on the economy's short-run Phillips curve. When the unemployment rate is 4 percent

If the unemployment rate initially equals its natural rate, then if the inflation rate rises above its expected rate, the unemployment rate

Which of the following results in the aggregate demand curve shifting rightward year after year?

A higher price for oil shifts the

In a demand-pull inflation, if the Fed stops expanding the quantity of money

For a given level of anticipated inflation and natural unemployment rate, the short-run Phillips curve shows the relationship between

Which of the following could lead to demand-pull inflation?

What is the factor that leads to business cycles in the monetarist cycle theory?

The main sources of cost-push inflation are increases in

A decrease in the expected inflation rate leads to ________ in the long-run Phillips curve and ________ in the short-run Phillips curve.

The short-run Phillips curve intersects the long-run Phillips curve at the

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

A decrease in the expected inflation rate leads to in the long-run Phillips curve and in the short-run Phillips curve.