Exam 28: The Business Cycle, Inflation, and Deflation

Figure 28.4.1 Use the figure below to answer the following questions. -Refer to Figure 28.4.1. The figure illustrates an economy's Phillips curves. What is the natural unemployment rate?

A forecast that is based on all the relevant information available is

At full employment, an increase in the quantity of money (ceteris paribus)can start

According to real business cycle theory, a fall in the real interest rate ________ the supply of labour and ________ employment.

The key ripple effect in real business cycle theory is the ________ decision and it depends on the ________.

If the natural unemployment rate increases, the long-run Phillips curve ________, the short-run Phillips curve ________, and the expected inflation rate ________.

The Canadian short-run Phillips curve ________ when the expected inflation rate rises and ________ when the expected inflation rate falls. The Canadian short-run Phillips curve ________ when the natural unemployment rate increases and ________ when the natural unemployment rate decreases.

Suppose the quantity of money is expected to remain unchanged but it actually increases. The price level

A cost-price inflation spiral results if the policy response to stagflation is to keep

Table 28.4.2 -The economy's natural unemployment rate is 4 percent. Table 28.4.2 gives some points on the economy's short-run Phillips curve. When the unemployment rate is 4 percent,

The key difference between new classical cycle theory and new Keynesian cycle theory is that the new classical cycle theory believes that ________ while the new Keynesian cycle theory believes that ________.

Which of the following are business cycle theories that regard fluctuations in aggregate demand as the factor that creates business cycles? I. Keynesian cycle theory II. real business cycle theory III. monetarist cycle theory

Stagflation can result from

Figure 28.2.4 Use the figure below to answer the following question. -Refer to Figure 28.2.4. The figure illustrates an economy initially in equilibrium at point A. If the quantity of money is expected to increase by 50 percent, what is the rational expectation of the price level?

Deflation ends with

Real business cycle theorists believe that the intertemporal substitution effect ________. Many other economists believe that the intertemporal substitution effect ________.

Cost-push inflation can result from an initial

Figure 28.2.2 Use the figure below to answer the following questions. -Refer to Figure 28.2.2. Consider the market for labour as the short-run aggregate supply curve shifts leftward from SAS₀ to SAS₁. This shift could have been the result of an agreement between workers and employers for a

Choose the statement that is incorrect.

Fact 28.4.1 Eurozone Unemployment Hits Record High As Inflation Rises Unexpectedly Eurozone unemployment rose to 10.7 percent. At the same time, Eurozone inflation unexpectedly rose to 2.7 percent a year, up from the previous month's 2.6 percent a year. Source: Huffington Post, March 1, 2012 -Consider Fact 28.4.1. A very high unemployment rate can be accounted for by the Phillips curve model by all of the following except