Exam 12: The Business Cycle, Inflation, and Deflation

In a persisting demand-pull inflation

Suppose that the expected inflation rate is 8 percent and the unemployment rate is 3 percent. If the actual inflation rate rises to 10 percent and the expected inflation rate does not change, then

Real business cycle economists claim that the intertemporal substitution effect

Which of the diagrams in the above figure best illustrates a long-run Phillips curve?

Which of the following theories is criticized for assuming the money wage rate is not sticky?

In a demand-pull inflation brought about by increases in the quantity of money, real GDP might increase at times because

Which of the following can start an inflation?

Describe how a demand-pull inflation can occur.

If an economy at potential GDP experiences a demand shock that shifts the aggregate demand curve rightward, there will be

In the new Keynesian business cycle theory, ________ can effect real GDP.

Which theory distinguishes between expected and unexpected fluctuations in aggregate demand and argues that only unexpected changes can affect real GDP?

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

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

Increases in the prices of raw materials can create cost-push inflation.

The factor that leads to business cycle events within real business cycle theory is represented by

The factor leading to business cycles in the Keynesian model is ________.

According to real business cycle theory, a fall in the real interest rate ________ current labor supply and ________ current employment.

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

According to the ________ theory, technological change can be so rapid that some existing capital becomes obsolete and ________.

An increase in the expected inflation rate leads to ________ the short-run Phillips curve.