Question 1

During which decade did the United States suffer from the worst cost-push inflation?

Accepted Answer

A)  1960s 
B)  1970s 
C)  1980s 
D)  1990s 
A)  1960s 
B)  1970s 
C)  1980s 
D)  1990s

Question 2

Suppose that the economy is at full employment and aggregate demand increases by more than it is anticipated to increase. Other things remaining the same, ________.

Accepted Answer

A)  long-run aggregate supply decreases 
B)  real GDP remains at potential GDP 
C)  real GDP increases above potential GDP 
D)  real GDP decreases below potential GDP 
A)  long-run aggregate supply decreases 
B)  real GDP remains at potential GDP 
C)  real GDP increases above potential GDP 
D)  real GDP decreases below potential GDP

Question 3

When the price level is rising and simultaneously real GDP is decreasing

Accepted Answer

A)  the natural unemployment rate increases. 
B)  stagflation occurs. 
C)  there is an expansionary gap. 
D)  the Fed has increased the discount rate. 
A)  the natural unemployment rate increases. 
B)  stagflation occurs. 
C)  there is an expansionary gap. 
D)  the Fed has increased the discount rate.

Question 4

By itself, an increase in the price of oil shifts the

Accepted Answer

A)  short-run aggregate supply curve leftward and does not shift the aggregate demand curve. 
B)  short-run aggregate supply curve rightward and does not shift the aggregate demand curve. 
C)  aggregate demand curve leftward and does not shift the short-run aggregate supply curve. 
D)  aggregate demand curve rightward and does not shift the short-run aggregate supply curve. 
A)  short-run aggregate supply curve leftward and does not shift the aggregate demand curve. 
B)  short-run aggregate supply curve rightward and does not shift the aggregate demand curve. 
C)  aggregate demand curve leftward and does not shift the short-run aggregate supply curve. 
D)  aggregate demand curve rightward and does not shift the short-run aggregate supply curve.

Question 5

-An economy is in long-run equilibrium and the price level is 100 in the figure above. Aggregate demand increases and the aggregate demand curve shifts to AD?. If the increase in aggregate demand is expected, then the inflation rate is ________.

Accepted Answer

A)  0 percent a year 
B)  10 percent a year 
C)  20 percent a year 
D)  More than 20 percent a year 
A)  0 percent a year 
B)  10 percent a year 
C)  20 percent a year 
D)  More than 20 percent a year

Question 6

Critics of the real business cycle model argue that

Accepted Answer

A)  investment spending is strongly related to the real interest rate. 
B)  labor supply is only weakly related to the real interest rate. 
C)  investment spending is only weakly related to the real interest rate. 
D)  labor supply is very strongly related to the real interest rate. 
A)  investment spending is strongly related to the real interest rate. 
B)  labor supply is only weakly related to the real interest rate. 
C)  investment spending is only weakly related to the real interest rate. 
D)  labor supply is very strongly related to the real interest rate.

Question 7

"All for One, but None for All"
In an article regarding how Great Britain and France are addressing the economic crisis in 2008, Britain's prime minister "is eager to encourage consumer spending" while France's president "wants to boost investment in both the private and public sectors." Both leaders are concerned because "hardly a day goes by without some manufacturing company announcing painful restructuring, plant closures or temporary lay-offs."
Www)ft.com, 11/24/2008
If the governments can increase consumption or investment while holding the expected inflation constant, there would be

Accepted Answer

A)  a rightward shift of the long-run Phillips curve. 
B)  a movement down along the short-run Phillips curve 
C)  a movement up along the short-run Phillips curve. 
D)  a leftward shift of the AD curve. 
A)  a rightward shift of the long-run Phillips curve. 
B)  a movement down along the short-run Phillips curve 
C)  a movement up along the short-run Phillips curve. 
D)  a leftward shift of the AD curve.

Question 8

According to real business cycle (RBC)theory, a change in the quantity of money leads to

Accepted Answer

A)  a change in the price level and in real GDP. 
B)  a change in the price level but no change in real GDP. 
C)  a change in investment and real GDP. 
D)  a change in the real wage rate and the money wage rate. 
A)  a change in the price level and in real GDP. 
B)  a change in the price level but no change in real GDP. 
C)  a change in investment and real GDP. 
D)  a change in the real wage rate and the money wage rate.

Question 9

The price level falls if

Accepted Answer

A)  aggregate demand increases more rapidly than aggregate supply. 
B)  aggregate demand increases more slowly than aggregate supply. 
C)  aggregate demand increases and aggregate supply does not change. 
D)  neither aggregate demand nor aggregate supply change. 
A)  aggregate demand increases more rapidly than aggregate supply. 
B)  aggregate demand increases more slowly than aggregate supply. 
C)  aggregate demand increases and aggregate supply does not change. 
D)  neither aggregate demand nor aggregate supply change.

Question 10

Which of the following would shift the aggregate demand curve leftward year after year?

Accepted Answer

A)  a one-time tax cut 
B)  a one-time increase in government expenditures on goods and services 
C)  inflation 
D)  negative growth in the quantity of money 
A)  a one-time tax cut 
B)  a one-time increase in government expenditures on goods and services 
C)  inflation 
D)  negative growth in the quantity of money

Question 11

-In the above figure, what factor might have led to the shift in the short-run Phillips curve from SRPC? to SRPC??

Accepted Answer

The long-run Phillips curve di

Question 12

The term "stagflation" refers to the situation when

Accepted Answer

A)  the aggregate supply curve shifts leftward, prices increase and real GDP decreases. 
B)  real GDP and the price level both rise because of an increase in aggregate demand. 
C)  prices become stagnant and do not increase or decrease. 
D)  the short-run aggregate supply curve and the aggregate demand curve shift in opposite directions. 
A)  the aggregate supply curve shifts leftward, prices increase and real GDP decreases. 
B)  real GDP and the price level both rise because of an increase in aggregate demand. 
C)  prices become stagnant and do not increase or decrease. 
D)  the short-run aggregate supply curve and the aggregate demand curve shift in opposite directions.

Question 13

Demand-pull inflation is an inflation that results from an initial ________.

Accepted Answer

A)  increase in aggregate demand 
B)  decrease in aggregate demand 
C)  increase in wage rates 
D)  increase in natural resource prices 
A)  increase in aggregate demand 
B)  decrease in aggregate demand 
C)  increase in wage rates 
D)  increase in natural resource prices

Question 14

In late 2008, Great Britain's inflation rate fell from 5.2 percent to 4.5 percent while unemployment was increased from 5.4 percent to 6 percent. These changes would be shown as a

Accepted Answer

A)  leftward shift of the long-run Phillips curve. 
B)  movement up along the short-run Phillips curve. 
C)  movement down the short-run Phillips curve. 
D)  rightward shift of the long-run Phillips curve. 
A)  leftward shift of the long-run Phillips curve. 
B)  movement up along the short-run Phillips curve. 
C)  movement down the short-run Phillips curve. 
D)  rightward shift of the long-run Phillips curve.

Question 15

A rise in the price level because of an increase in the price of oil

Accepted Answer

A)  definitely triggers a cost-push inflation. 
B)  definitely triggers a demand-pull inflation. 
C)  might trigger a cost-push inflation. 
D)  might trigger a demand-pull inflation. 
A)  definitely triggers a cost-push inflation. 
B)  definitely triggers a demand-pull inflation. 
C)  might trigger a cost-push inflation. 
D)  might trigger a demand-pull inflation.

Question 16

During an unanticipated deflation, the real wage rate ________ and employment ________.

Accepted Answer

A)  falls; decreases 
B)  falls; increases 
C)  rises; decreases 
D)  rises; increases 
A)  falls; decreases 
B)  falls; increases 
C)  rises; decreases 
D)  rises; increases

Question 17

In the long run, what is the tradeoff between inflation and unemployment? Explain your answer using Phillips curve analysis.

Accepted Answer

In the long run, there is no tradeoff be

Question 18

According to the real business cycle theory, a decrease in the real interest rate today increases current labor supply.

Accepted Answer

A) True 
 B)False

Question 19

Demand-pull inflation starts with a shift of the

Accepted Answer

A)  SAS curve rightward. 
B)  AD curve rightward. 
C)  SAS curve leftward. 
D)  AD curve leftward. 
A)  SAS curve rightward. 
B)  AD curve rightward. 
C)  SAS curve leftward. 
D)  AD curve leftward.

Question 20

What is a cost-push inflation?

Accepted Answer

A cost-push inflation is an in

During which decade did the United States suffer from the worst cost-push inflation?

Suppose that the economy is at full employment and aggregate demand increases by more than it is anticipated to increase. Other things remaining the same, ________.

When the price level is rising and simultaneously real GDP is decreasing

By itself, an increase in the price of oil shifts the

-An economy is in long-run equilibrium and the price level is 100 in the figure above. Aggregate demand increases and the aggregate demand curve shifts to AD?. If the increase in aggregate demand is expected, then the inflation rate is ________.

Critics of the real business cycle model argue that

According to real business cycle (RBC)theory, a change in the quantity of money leads to

The price level falls if

Which of the following would shift the aggregate demand curve leftward year after year?

-In the above figure, what factor might have led to the shift in the short-run Phillips curve from SRPC? to SRPC??

The term "stagflation" refers to the situation when

Demand-pull inflation is an inflation that results from an initial ________.

In late 2008, Great Britain's inflation rate fell from 5.2 percent to 4.5 percent while unemployment was increased from 5.4 percent to 6 percent. These changes would be shown as a

A rise in the price level because of an increase in the price of oil

During an unanticipated deflation, the real wage rate and employment .

In the long run, what is the tradeoff between inflation and unemployment? Explain your answer using Phillips curve analysis.

According to the real business cycle theory, a decrease in the real interest rate today increases current labor supply.

Demand-pull inflation starts with a shift of the

What is a cost-push inflation?

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 12: The Business Cycle, Inflation, and Deflation

During which decade did the United States suffer from the worst cost-push inflation?

Suppose that the economy is at full employment and aggregate demand increases by more than it is anticipated to increase. Other things remaining the same, ________.

When the price level is rising and simultaneously real GDP is decreasing

By itself, an increase in the price of oil shifts the

-An economy is in long-run equilibrium and the price level is 100 in the figure above. Aggregate demand increases and the aggregate demand curve shifts to AD?. If the increase in aggregate demand is expected, then the inflation rate is ________.

Critics of the real business cycle model argue that

According to real business cycle (RBC)theory, a change in the quantity of money leads to

The price level falls if

Which of the following would shift the aggregate demand curve leftward year after year?

-In the above figure, what factor might have led to the shift in the short-run Phillips curve from SRPC? to SRPC??

The term "stagflation" refers to the situation when

Demand-pull inflation is an inflation that results from an initial ________.

In late 2008, Great Britain's inflation rate fell from 5.2 percent to 4.5 percent while unemployment was increased from 5.4 percent to 6 percent. These changes would be shown as a

A rise in the price level because of an increase in the price of oil

During an unanticipated deflation, the real wage rate ________ and employment ________.

In the long run, what is the tradeoff between inflation and unemployment? Explain your answer using Phillips curve analysis.

According to the real business cycle theory, a decrease in the real interest rate today increases current labor supply.

Demand-pull inflation starts with a shift of the

What is a cost-push inflation?

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

During an unanticipated deflation, the real wage rate and employment .