Question 1

What does the short-run Phillips curve indicate about the relationship between inflation and unemployment?

Accepted Answer

Because the slope of the short-run Phillips curve is negative,the short-run Phillips curve indicates that a tradeoff between inflation and unemployment exists.Lower inflation can be obtained,but the price is higher unemployment.Similarly,lower unemployment is possible but the price is higher inflation.

Question 2

Using the monetarist model,place the following events in the order in which they occur in a business cycle. I. Money wages fall and the SAS curve shifts rightward.
II) The Federal Reserve decreases the growth rate of the quantity of money.
III) The AD curve shifts leftward.

Accepted Answer

A)  II, III, I 
B)  III, II, I 
C)  I, III, II 
D)  The events are not part of a monetarist model of the business cycle. 
A)  II, III, I 
B)  III, II, I 
C)  I, III, II 
D)  The events are not part of a monetarist model of the business cycle. A

Question 3

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

Accepted Answer

A)  all of the time. 
B)  only when the short-run aggregate supply curve is vertical. 
C)  only when the changes in aggregate demand are expected. 
D)  only when the changes in aggregate demand are unexpected. 
A)  all of the time. 
B)  only when the short-run aggregate supply curve is vertical. 
C)  only when the changes in aggregate demand are expected. 
D)  only when the changes in aggregate demand are unexpected. D

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 long-run Phillips curve shifted leftward. 
B)  the long-run Phillips curve shifted rightward. 
C)  the long-run Phillips curve shifted downward. 
D)  None of the above answers are correct because a change in the expected inflation rate does not shift the long-run Phillips curve. 
A)  the long-run Phillips curve shifted leftward. 
B)  the long-run Phillips curve shifted rightward. 
C)  the long-run Phillips curve shifted downward. 
D)  None of the above answers are correct because a change in the expected inflation rate does not shift the long-run Phillips curve.

Question 5

-Which of the above figures best shows the start of a demand-pull inflation?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D

Question 6

Which of the following is a change that would NOT start a demand-pull inflation?

Accepted Answer

A)  an increase in exports 
B)  an increase in labor productivity 
C)  an increase in government expenditure on goods and services 
D)  an increase in the quantity of money 
A)  an increase in exports 
B)  an increase in labor productivity 
C)  an increase in government expenditure on goods and services 
D)  an increase in the quantity of money

Question 7

To prevent demand-pull inflation

Accepted Answer

A)  firms must refuse to increase wages. 
B)  the Fed must not let the quantity of money persistently rise. 
C)  the natural unemployment rate must increase. 
D)  real GDP must increase. 
A)  firms must refuse to increase wages. 
B)  the Fed must not let the quantity of money persistently rise. 
C)  the natural unemployment rate must increase. 
D)  real GDP must increase.

Question 8

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

Accepted Answer

A)  an increase in government expenditure 
B)  an increase in imports 
C)  a decrease in the quantity of money 
D)  an increase in the money prices of raw materials 
A)  an increase in government expenditure 
B)  an increase in imports 
C)  a decrease in the quantity of money 
D)  an increase in the money prices of raw materials

Question 9

When there is a cost-push inflation,

Accepted Answer

A)  workers demand higher money wages because of the inflation. 
B)  the short-run aggregate supply curve shifts rightward. 
C)  the aggregate demand curve shifts leftward because of the cost hikes. 
D)  None of the above answers is correct. 
A)  workers demand higher money wages because of the inflation. 
B)  the short-run aggregate supply curve shifts rightward. 
C)  the aggregate demand curve shifts leftward because of the cost hikes. 
D)  None of the above answers is correct.

Question 10

If oil prices increase,then in the short run,real GDP will ________ and the price level will ________.

Accepted Answer

A)  increase; rise 
B)  increase; fall 
C)  decrease; rise 
D)  decrease; fall 
A)  increase; rise 
B)  increase; fall 
C)  decrease; rise 
D)  decrease; fall

Question 11

Explain how the expected inflation rate affects the short-run Phillips curve.Be sure to mention the role played by the money wage rate.

Accepted Answer

When the expected inflation rate falls,t

Question 12

In a demand-pull inflation,money wage rates rise because

Accepted Answer

A)  a decrease in aggregate demand creates a labor shortage. 
B)  an increase in aggregate demand creates a labor surplus. 
C)  an increase in aggregate demand creates a labor shortage. 
D)  a decrease in aggregate demand creates a labor surplus. 
A)  a decrease in aggregate demand creates a labor shortage. 
B)  an increase in aggregate demand creates a labor surplus. 
C)  an increase in aggregate demand creates a labor shortage. 
D)  a decrease in aggregate demand creates a labor surplus.

Question 13

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

Accepted Answer

A)  the growth rate in labor productivity. 
B)  the growth rate in the quantity of money. 
C)  adverse shocks to international trade. 
D)  fluctuations in business confidence. 
A)  the growth rate in labor productivity. 
B)  the growth rate in the quantity of money. 
C)  adverse shocks to international trade. 
D)  fluctuations in business confidence.

Question 14

A decrease in the natural unemployment rate shifts the long-run Phillips curve ________ and ________ the short-run Phillips curve.

Accepted Answer

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

Question 15

When the expected inflation rate changes,what happens to the short-run Phillips curve?
To the long-run Phillips curve?

Accepted Answer

When the expected inflation rate changes

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

A rational expectation is

Accepted Answer

A)  a correct forecast but it might not be the best available forecast. 
B)  an incorrect forecast. 
C)  not necessarily correct but is the best available forecast. 
D)  necessarily correct because it is the best available forecast. 
A)  a correct forecast but it might not be the best available forecast. 
B)  an incorrect forecast. 
C)  not necessarily correct but is the best available forecast. 
D)  necessarily correct because it is the best available forecast.

Question 18

An unexpected decrease in aggregate demand will trigger a recession in the ________ theory of the business cycle.

Accepted Answer

A)  new Keynesian cycle 
B)  new classical cycle 
C)  Keynesian cycle 
D)  Both answers A and B are correct. 
A)  new Keynesian cycle 
B)  new classical cycle 
C)  Keynesian cycle 
D)  Both answers A and B are correct.

Question 19

Stagflation occurs when the SAS curve shifts leftward.

Accepted Answer

A) True 
 B)False

Question 20

What is the impulse that leads to business cycle in the real business cycle,RBC,theory?

Accepted Answer

The real business cycle theory focuses o

What does the short-run Phillips curve indicate about the relationship between inflation and unemployment?

Using the monetarist model,place the following events in the order in which they occur in a business cycle. I. Money wages fall and the SAS curve shifts rightward. II) The Federal Reserve decreases the growth rate of the quantity of money. III) The AD curve shifts leftward.

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

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

-Which of the above figures best shows the start of a demand-pull inflation?

Which of the following is a change that would NOT start a demand-pull inflation?

To prevent demand-pull inflation

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

When there is a cost-push inflation,

If oil prices increase,then in the short run,real GDP will and the price level will .

Explain how the expected inflation rate affects the short-run Phillips curve.Be sure to mention the role played by the money wage rate.

In a demand-pull inflation,money wage rates rise because

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

A decrease in the natural unemployment rate shifts the long-run Phillips curve and the short-run Phillips curve.

When the expected inflation rate changes,what happens to the short-run Phillips curve? To the long-run Phillips curve?

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

A rational expectation is

An unexpected decrease in aggregate demand will trigger a recession in the ________ theory of the business cycle.

Stagflation occurs when the SAS curve shifts leftward.

What is the impulse that leads to business cycle in the real business cycle,RBC,theory?

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

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

Exam 12: Inflation, Jobs, and the Business Cycle

What does the short-run Phillips curve indicate about the relationship between inflation and unemployment?

Using the monetarist model,place the following events in the order in which they occur in a business cycle. I. Money wages fall and the SAS curve shifts rightward. II) The Federal Reserve decreases the growth rate of the quantity of money. III) The AD curve shifts leftward.

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

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

-Which of the above figures best shows the start of a demand-pull inflation?

Which of the following is a change that would NOT start a demand-pull inflation?

To prevent demand-pull inflation

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

When there is a cost-push inflation,

If oil prices increase,then in the short run,real GDP will ________ and the price level will ________.

Explain how the expected inflation rate affects the short-run Phillips curve.Be sure to mention the role played by the money wage rate.

In a demand-pull inflation,money wage rates rise because

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

A decrease in the natural unemployment rate shifts the long-run Phillips curve ________ and ________ the short-run Phillips curve.

When the expected inflation rate changes,what happens to the short-run Phillips curve? To the long-run Phillips curve?

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

A rational expectation is

An unexpected decrease in aggregate demand will trigger a recession in the ________ theory of the business cycle.

Stagflation occurs when the SAS curve shifts leftward.

What is the impulse that leads to business cycle in the real business cycle,RBC,theory?

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

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

If oil prices increase,then in the short run,real GDP will and the price level will .

A decrease in the natural unemployment rate shifts the long-run Phillips curve and the short-run Phillips curve.