Question 1

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

Accepted Answer

A) Real business cycle theory 
B) New classical cycle theory 
C) Keynesian cycle theory 
D) Monetarist cycle theory 
E) None of the above 
A) Real business cycle theory 
B) New classical cycle theory 
C) Keynesian cycle theory 
D) Monetarist cycle theory 
E) None of the above

Question 2

An increase in the expected rate of inflation shifts the

Accepted Answer

A) short-run Phillips curve downward. 
B) short-run Phillips curve upward. 
C) long-run Phillips curve rightward. 
D) long-run Phillips curve leftward. 
E) long-run Phillips curve upward. 
A) short-run Phillips curve downward. 
B) short-run Phillips curve upward. 
C) long-run Phillips curve rightward. 
D) long-run Phillips curve leftward. 
E) long-run Phillips curve upward.

Question 3

Suppose that the money prices of raw materials rise. With no action by the Bank of Canada, I. the aggregate demand curve shifts rightward and the price level rises.
II. the aggregate demand curve shifts rightward and the aggregate supply curve shifts leftward.
III. the initial outcome is lower employment and a rise in the price level.

Accepted Answer

A) I only 
B) II only 
C) III only 
D) I and II only 
E) I, II, and III 
A) I only 
B) II only 
C) III only 
D) I and II only 
E) I, II, and III

Question 4

Stagflation is the result of

Accepted Answer

A) a decrease in aggregate demand. 
B) a decrease in short-run aggregate supply. 
C) an increase in aggregate demand. 
D) an increase in short-run aggregate supply. 
E) a decrease in short-run aggregate supply combined with a simultaneous increase in aggregate supply. 
A) a decrease in aggregate demand. 
B) a decrease in short-run aggregate supply. 
C) an increase in aggregate demand. 
D) an increase in short-run aggregate supply. 
E) a decrease in short-run aggregate supply combined with a simultaneous increase in aggregate supply.

Question 5

Figure 28.1.1
Use the figure below to answer the following questions.
  
-Refer to Figure 28.1.1. Suppose the economy moves from point A to point C. According to the monetarist theory of the business cycle, what could have caused this movement?

Accepted Answer

A) an increase in the money wage rate 
B) an increase in the growth rate of the quantity of money 
C) a decrease in the growth rate of the quantity of money 
D) an increase in uncertainty 
E) animal spirits 
A) an increase in the money wage rate 
B) an increase in the growth rate of the quantity of money 
C) a decrease in the growth rate of the quantity of money 
D) an increase in uncertainty 
E) animal spirits

Question 6

According to ________, the business cycle is the result of aggregate demand growing at a fluctuating rate.

Accepted Answer

A) the Keynesian cycle theory only 
B) only the Keynesian and monetarist cycle theories 
C) the Keynesian, monetarist, and real business cycle theories 
D) the Keynesian, monetarist, and new classical cycle theories 
E) real business cycle theory 
A) the Keynesian cycle theory only 
B) only the Keynesian and monetarist cycle theories 
C) the Keynesian, monetarist, and real business cycle theories 
D) the Keynesian, monetarist, and new classical cycle theories 
E) real business cycle theory

Question 7

Figure 28.2.5
Use the figure below to answer the following question.
  
-Refer to Figure 28.2.5. Which one of the graphs in the figure represents an economy experiencing stagflation?

Accepted Answer

A) (a)only 
B) (b)only 
C) (c)only 
D) (d)only 
E) Both (a)and (c) 
A) (a)only 
B) (b)only 
C) (c)only 
D) (d)only 
E) Both (a)and (c)

Question 8

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 expected inflation rate?

Accepted Answer

A) 9 percent 
B) 4 percent 
C) 2 percent 
D) 7 percent 
E) cannot be determined without more information 
A) 9 percent 
B) 4 percent 
C) 2 percent 
D) 7 percent 
E) cannot be determined without more information

Question 9

According to mainstream business cycle theory, ________ grows at a steady rate and ________ grows at a fluctuating rate.

Accepted Answer

A) aggregate demand; long-run aggregate supply 
B) potential GDP; aggregate demand 
C) potential GDP; short-run aggregate supply 
D) short-run aggregate supply; long-run aggregate supply 
E) short-run aggregate supply; aggregate demand 
A) aggregate demand; long-run aggregate supply 
B) potential GDP; aggregate demand 
C) potential GDP; short-run aggregate supply 
D) short-run aggregate supply; long-run aggregate supply 
E) short-run aggregate supply; aggregate demand

Question 10

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

Accepted Answer

A) does not shift; does not shift; does not shift; does not shift 
B) does not shift; does not shift; shifts rightward; shifts leftward 
C) shifts upward; shifts downward; shifts rightward; shifts leftward 
D) shifts rightward; shifts leftward; does not shift; does not shift 
E) shifts rightward; shifts leftward; shifts rightward; shifts leftward 
A) does not shift; does not shift; does not shift; does not shift 
B) does not shift; does not shift; shifts rightward; shifts leftward 
C) shifts upward; shifts downward; shifts rightward; shifts leftward 
D) shifts rightward; shifts leftward; does not shift; does not shift 
E) shifts rightward; shifts leftward; shifts rightward; shifts leftward

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

An increase in the expected rate of inflation shifts the

Stagflation is the result of

Figure 28.1.1 Use the figure below to answer the following questions. -Refer to Figure 28.1.1. Suppose the economy moves from point A to point C. According to the monetarist theory of the business cycle, what could have caused this movement?

According to ________, the business cycle is the result of aggregate demand growing at a fluctuating rate.

Figure 28.2.5 Use the figure below to answer the following question. -Refer to Figure 28.2.5. Which one of the graphs in the figure represents an economy experiencing stagflation?

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 expected inflation rate?

According to mainstream business cycle theory, grows at a steady rate and grows at a fluctuating rate.

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

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 28: The Business Cycle, Inflation, and Deflation

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

An increase in the expected rate of inflation shifts the

Stagflation is the result of

Figure 28.1.1 Use the figure below to answer the following questions. -Refer to Figure 28.1.1. Suppose the economy moves from point A to point C. According to the monetarist theory of the business cycle, what could have caused this movement?

According to ________, the business cycle is the result of aggregate demand growing at a fluctuating rate.

Figure 28.2.5 Use the figure below to answer the following question. -Refer to Figure 28.2.5. Which one of the graphs in the figure represents an economy experiencing stagflation?

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 expected inflation rate?

According to mainstream business cycle theory, ________ grows at a steady rate and ________ grows at a fluctuating rate.

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

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 mainstream business cycle theory, grows at a steady rate and grows at a fluctuating rate.

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