Exam 12: The Business Cycle, Inflation, and Deflation

Suppose that the expected inflation rate is 12 percent and the unemployment rate is 5 percent. If the expected inflation rate increases to 13 percent, then

As world economies recover from the financial crisis in 2008 and 2009, the U.S. economy returns to full employment and expected inflation equals actual inflation

The long-run Phillips curve shows the relationship between the inflation rate and the unemployment rate when the

-In the above figure, the economy is at point A. The inflation rate unexpectedly falls by two percentage points. As a result, the economy moves to point

-In the above figure, the economy is initially at point A. According to the monetarists, which point best represents the consequence of a short-run response to a decrease in the growth rate of the quantity of money?

Which of the following statements about a cost-push inflation is CORRECT?

In a demand-pull inflation, the AD curve shifts ________ and the SAS curve shifts ________.

The short-run Phillips curve intersects the long-run Phillips curve at the expected inflation rate.

Increases in the quantity of money can create demand-pull inflation.

When a cost-push inflation starts

When workers and employers correctly anticipate an increase in inflation caused by an increase in aggregate demand

When Japan experienced deflation in the 1990s and 2000s, Japan's

"The short-run Phillips curve shifts leftward when the inflation rate rises." Is the previous statement correct or incorrect?

Which business cycle theory emphasizes that, because of long-term wage agreements, both expected and unexpected fluctuations in aggregate demand can change real GDP?

A rise in the price level because of an increase in the money wage rate

-In the above figure, suppose that the economy is at point A when foreign countries begin an expansion and buy more U.S.-made goods. In the short run, this change creates a movement to point ________ and an eventual increase in ________.

When there is a cost-push inflation

Suppose that managers forecasted a large decline in expected sales and profits and so their confidence plummets. According to the ________, this forecast might start a business cycle.

Suppose that in response to a decrease in real interest rates, a person decides to reduce his labor supply today and increase it in the future. This behavior is most consistent with the

Which of the following is the factor that creates business cycles in the real business cycle theory?