Exam 12: U.S. Inflation, Unemployment, and Business Cycle

To prevent demand- pull inflation

"The long- run Phillips curve is downward sloping." Is the previous statement correct or incorrect?

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

Based on the Keynesian theory of the business cycle, if the economy is at its full- employment equilibrium and aggregate demand increases then

The long- run Phillips curve shows that in the long run, policymakers can

"All for One, but None for All" In an article regarding how Great Britain and France are addressing the economic crisis in 2008, Brit prime minister "is eager to encourage consumer spending" while France's president "wants to boo investment in both the private and public sectors." Both leaders are concerned because "hardly a da by without some manufacturing company announcing painful restructuring, plant closures or temporary lay- offs. " HYPERLINK "http://www.ft.com/" www.ft.com, 11/24/200 If the governments can increase consumption or investment while holding the expected inflation co there would be

According to new classical cycle theory, the business cycle is the result of

Cost- push inflation might start to occur if the

-In the above figure, the economy is at point A. An increase in oil prices that sets off a cost- push inflation will initially move the economy from point A to point

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

According to the new classical cycle theory, business cycles are caused by

An increase in the natural unemployment rate shifts

The Phillips curve shows the relationship between the

-In the above figure, suppose the economy starts at point A. The short- run response to a decrease in the growth rate of the quantity of money in monetarist business cycle theory moves the economy to point

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

A rational expectation of inflation is

In real business cycle theory, a decrease in productivity leads to all of the following events EXCEPT )

Both new Keynesian and new classical cycle theories claim that .

"The long- run Phillips curve is vertical at the expected inflation rate." Is the previous statement correct or incorrect?

By itself, an increase in aggregate demand increases GDP by the least amount in the .