Exam 12: The Business Cycle, Inflation, and Deflation

Suppose that a shock causes the aggregate demand curve to shift rightward. If the Fed does nothing

At the start of a cost-push inflation

The factor that leads to business cycles within the Keynesian cycle theory is

For an economy at full employment, an increase in the quantity of money will lead to which of the following sequences of shifts in aggregate demand and supply curves?

To prevent demand-pull inflation

According to the new classical model, changes in aggregate demand change real GDP

According to real business cycle (RBC) theory, a change in the quantity of money leads to

A rational expectation of inflation is

If the economy is initially at potential GDP and people correctly anticipate an increase in inflation so that their money wage rate adjusts immediately, then

Suppose an economist finds that real interest rates are extremely high in most recession, which are the times when employment is low. This finding would pose the biggest problem for the

In a story from www.Forbes.com (5/30/2003), it was reported that the Chief Technology Officer of the U.S. plans for the country to spend $58.1 billion on technology that year. He was planning to buy technology from Cisco Systems, Oracle and Sun Microsystems in addition to other software makers. This story reports on technological change which is the stressed in the ________ of business cycles.

"Inflation Gives Saudis Food for Thought" "My boss sent me back to return the milk - it's too expensive," said the Pakistani driver for a middle-class Saudi family at the checkout counter of the Al-Othaim supermarket. ...Saudi Arabia is enjoying an unprecedented economic boom ...as sectors [have] increased activity to meet the big internal demand." Www)ft.com, 1/18/2008 The story describes

-In the above figure, the economy is initially at point A. If workers and firms correctly anticipate the increase in aggregate demand and the resulting inflation rate, the economy will move to point

In 2012 the Cleveland Federal Reserve estimated that the expected inflation rate was 1.5 percent, the actual inflation rate was 2.1 percent, and the unemployment rate was 8.1 percent. A point on the short-run Phillips curve is the

Which of the following factors could start a demand-pull inflation?

According to the ________ theory, technological change can be so rapid that some existing capital becomes obsolete and ________.

In a persisting demand-pull inflation

In the new Keynesian business cycle theory, ________ can effect real GDP.

According to which theory of the business cycle do changes in the quantity of money never play a role in helping to explain fluctuations in real variables?

If the Fed responds to an increase in aggregate demand by increasing the quantity of money