Exam 28: The Business Cycle, Inflation, and Deflation

Table 28.4.1 11)Refer to Table 28.4.1. The table gives points on the short-run Phillips curve for the country of Ruritania. If the expected inflation rate is 10 percent, what is the natural unemployment rate? -Refer to Table 28.4.1. The table gives points on the short-run Phillips curve for the country of Ruritania. If the expected inflation rate is 10 percent, and the inflation rate unexpectedly falls to 8 percent, what is the unemployment rate?

Stagflation occurs when the economy experiences both a

According to real business cycle theory, if the Bank of Canada increases the quantity of money when real GDP decreases, real GDP

Table 28.4.1 11)Refer to Table 28.4.1. The table gives points on the short-run Phillips curve for the country of Ruritania. If the expected inflation rate is 10 percent, what is the natural unemployment rate? -Refer to Table 28.4.1. The table gives points on the short-run Phillips curve for the country of Ruritania. If the expected inflation rate is 10 percent, and the inflation rate unexpectedly rises to 12 percent, what is the unemployment rate?

The ________ cycle theory states that only unexpected fluctuations in aggregate demand bring fluctuations in real GDP around potential GDP.

According to real business cycle theory, workers' decisions to work now versus later depend on

If the inflation rate is lower than the expected inflation rate,

Figure 28.2.2 Use the figure below to answer the following questions. -Refer to Figure 28.2.2. The economy is in long-run equilibrium. If the short-run aggregate supply curve shifts leftward from SAS₀ to SAS₁, ceteris paribus, then people expect

For a given expected inflation rate, the higher the unemployment rate, the lower is the actual inflation rate. This relationship is the ________ Phillips curve. When the expected inflation rate changes, this is shown as a movement along the ________ Phillips curve.

According to real business cycle theory, an increase in productivity ________ the demand for loanable funds, ________ the demand for labour, and ________ the supply of labour. The real interest rate will ________.

The economy starts out at a full-employment equilibrium. Some events then occur that generate a demand-pull inflation. All of the following events except an increase in ________ might start a demand-pull inflation.

Figure 28.2.2 Use the figure below to answer the following questions. -Refer to Figure 28.2.2. If SAS shifts from SAS₀ to SAS₁, then

Suppose aggregate demand increases by more than expected. Which of the following does not occur?

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.

In the Keynesian business cycle theory, business cycles begin with a change in

Along the short-run Phillips curve, if the actual unemployment rate falls below the natural unemployment rate, the

Figure 28.2.2 Use the figure below to answer the following questions. -Refer to Figure 28.2.2. If the short-run aggregate supply curve does not shift, and remains at SAS₀, then the expected inflation rate is

Inflation that starts because aggregate demand increases is called

Suppose that the business cycle in Canada is best described by RBC theory. An advance in technology increases productivity. The when-to-work decision depends on the real interest rate. The ________ the real interest rate, other things remaining the same, the ________ is the supply of labour today. RBC theorists believe the when-to-work effect is ________.

Figure 28.2.6 Use the figure below to answer the following questions. -Refer to Figure 28.2.6. Starting at point A, the initial effect of a cost-push inflation is a move to point ________. As a cost-push inflation spiral proceeds, it follows the path ________.