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

In the above figure, the economy initially is at point A and then an increase in the quantity of money moves the economy to point D. At point D, the real wage rate has

Consider the U.S. data for inflation and the unemployment rate for the last four decades. Which of the following statements describes the relationship between the two variables?

A cost- push inflation spiral results if the Fed's response to stagflation is to keep

The figure above shows the initial aggregate demand curve, AD₀, the initial short- run aggregate supply curve, SAS₀, and the long- run aggregate supply curve, LAS. The points in the figure show possible combinations of real GDP and the price level at which the economy of Atlantia is in macroeconomic equilibrium. The economy is initially at point A. Then, the government increases its expenditure on goods and services. Draw the new aggregate demand and short- run aggregate supply curves in the figure to show the effects of this event on Atlan real GDP and price level. a) What happens to Atlantia's potential GDP? b) In the short run, what happens to aggregate supply and aggregate demand? c) What are the new short- run equilibrium real GDP and price level? d) In the long run, what happens to the short- run aggregate supply and aggregate demand? e) What are the new long- run equilibrium real GDP and price level?

The inflation rate has been 3 percent per year for several years, and the unemployment rate has been stable at 5 percent. Unexpected changes in monetary policy cause the inflation rate to increase to 6 percent. In the short run, the unemployment rate will

In the real business cycle framework, a technology shock that increases investment demand and the demand for loanable funds leads to a _ _ level of saving and a _ _ real interest rate.

During a cost- push inflation spiral, the money wage rate _ and the quantity of money )

Suppose aggregate demand increases by more than expected. Which of the following describes what will occur?

Demand pull inflation can be started by

The long- run Phillips curve is .

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

"UK Inflation Surges to 16- year High" According to the story, "High inflation in July will also lead to ... "further rises next January ..." Eco also noted that inflation may get worse because the current data did not yet include "announced rise and electricity prices." HYPERLINK "http://www.ft.com/" www.ft.com, 8/12/200 The story reflects the concept of

-In the above figure, what factor might have lead to the shift in the short- run Phillips curve from SRPC₁ to SRPC₂?

Stagflation results from

Which business cycle theory claims that increases and decreases in the pace of technological change will trigger a business cycle?

What are criticisms of the real business cycle theory?

If demand pull inflation occurs when the economy is already at potential GDP, then following the initial increase in aggregate demand, the

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

Which of the following leads to a downward shift in the short- run Phillips curve?

-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