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

Cost- push inflation might initially result from

If the natural unemployment rate increases, then the short- run Phillips curve shifts and the long- run Phillips curve shifts .

"As the economy moves upward along its short- run aggregate supply curve, the economy also moves upward along its short- run Phillips curve." Is the previous statement correct or incorrect? Briefly explain your answer.

In the above figure, if the economy moves from point A to point E,

A demand- pull inflation can be described as shifts in the AD curve and shifts in the SAS curve.

Demand- pull inflation results from continually increasing the quantity of money, which leads to a continually

-In the above figure, suppose the economy has moved from point D to point B. According to the monetarist theory of the business cycle, what could have caused this movement?

The new classical cycle theory views anticipated fluctuations in aggregate demand as the main source of business cycle economic fluctuations.

During the 1970s when both the unemployment rate and inflation rate rose, it is reasonable to conclude that

The new classical theory argues that the primary factor leading to business cycles are

A one- time rise in the price level can turn into a demand- pull inflation when .

In real business cycle theory, the factor leading to a business cycle is

When a cost- push inflation starts

Suppose that a severe shock that decreases the demand for loanable funds hits the United States. Which of the following can we expect to occur according to the real business cycle model?

The short- run Phillips curve shows the relationship between unemployment and inflation when the natural unemployment rate is constant and

Over the last several years, the money supply in Indonesia as increased by 9 percent in 2003 to 14 pe in 2005 and 23 percent in 2007. At the same time, real GDP has grown steadily at over 4 percent ann These changes would be shown as i. rightward shifts of the AD curve ii. a movement down along the short- run Phillips curve iii. rightward shifts of the LAS curve

-In the above figure, suppose the economy is at point A. An unexpected increase in the inflation rate to 6 percent will result in a movement to point

The new Keynesian cycle theory views only anticipated changes in aggregate demand as the source of business cycle economic fluctuations.

Moving along the short- run Phillips curve indicates

"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 consumption and investment are increased by the governments' policies, we would expect a the short- run Phillips curve.