Question 1

The SAS curve shifts leftward if

Accepted Answer

A)  the money wage rate increases. 
B)  tax cuts stimulate labor supply. 
C)  good weather increases agricultural harvests. 
D)  OPEC reduces world oil prices. 
A)  the money wage rate increases. 
B)  tax cuts stimulate labor supply. 
C)  good weather increases agricultural harvests. 
D)  OPEC reduces world oil prices.

Question 2

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

Accepted Answer

A)  a movement downward along 
B)  a downward shift of 
C)  a movement upward along 
D)  an upward shift of 
A)  a movement downward along 
B)  a downward shift of 
C)  a movement upward along 
D)  an upward shift of

Question 3

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

Accepted Answer

A)  an increase in government expenditures on goods and services 
B)  an increase in labor productivity 
C)  an increase in the quantity of money 
D)  an increase in exports 
A)  an increase in government expenditures on goods and services 
B)  an increase in labor productivity 
C)  an increase in the quantity of money 
D)  an increase in exports

Question 4

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

Accepted Answer

A)  real wages rise. 
B)  real wages fall. 
C)  money wages fall. 
D)  tax rates decline. 
A)  real wages rise. 
B)  real wages fall. 
C)  money wages fall. 
D)  tax rates decline.

Question 5

The factor that leads to business cycles in the real business cycle theory is changes in

Accepted Answer

A)  the growth rate of productivity. 
B)  expected aggregate demand. 
C)  expected future sales and profits. 
D)  the growth rate of the quantity of money. 
A)  the growth rate of productivity. 
B)  expected aggregate demand. 
C)  expected future sales and profits. 
D)  the growth rate of the quantity of money.

Question 6

For a cost- push inflation to occur, oil price increases must be accompanied by

Accepted Answer

A)  increases in government expenditures. 
B)  lower personal tax rates. 
C)  increases in the quantity of money. 
D)  decreased investment spending. 
A)  increases in government expenditures. 
B)  lower personal tax rates. 
C)  increases in the quantity of money. 
D)  decreased investment spending.

Question 7

According to which theory of the business cycle do changes in the quantity of money never play a role in helping to explaining fluctuations in real variables?

Accepted Answer

A)  real business cycle 
B)  rational expectations 
C)  monetarist 
D)  Keynesian 
A)  real business cycle 
B)  rational expectations 
C)  monetarist 
D)  Keynesian

Question 8

A demand- pull inflation requires persistent increases in

Accepted Answer

A)  government expenditures. 
B)  the quantity of money. 
C)  real wages. 
D)  tax rates. 
A)  government expenditures. 
B)  the quantity of money. 
C)  real wages. 
D)  tax rates.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

The short- run Phillips curve shows

Accepted Answer

A)  an inverse relationship between interest rates and the price level. 
B)  a direct relationship between the price level and real GDP. 
C)  an inverse relationship between the unemployment rate and the inflation rate. 
D)  a direct relationship between the quantity of money and interest rates. 
A)  an inverse relationship between interest rates and the price level. 
B)  a direct relationship between the price level and real GDP. 
C)  an inverse relationship between the unemployment rate and the inflation rate. 
D)  a direct relationship between the quantity of money and interest rates.

Question 11

"Shoe Industry under Pressure Amid Rising Costs "
Rising costs have forced about 15 per cent of shoe manufacturers in a major south China industrial c to shut down or relocate in the past year... [the firms have] identified rising wages as a key factor be the closures and relocations from Dongguan...The problems in the footwear industry reflect broader affecting manufacturers across China's Pearl River Delta..."
HYPERLINK "http://www.ft.com/" www.ft.com, 2/26/200
Using an AS/AD framework to describe the events in the story, there would be a

Accepted Answer

A)  rightward shift in the AD curve. 
B)  rightward shift in the SAS curve. 
C)  leftward shift in the SAS curve. 
D)  leftward shift in the AD curve. 
A)  rightward shift in the AD curve. 
B)  rightward shift in the SAS curve. 
C)  leftward shift in the SAS curve. 
D)  leftward shift in the AD curve.

Question 12

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

Accepted Answer

A)  changes in expected future sales and profits of firms. 
B)  adverse shocks to international trade. 
C)  changes in the growth rate in the quantity of money. 
D)  changes in growth rate in productivity. 
A)  changes in expected future sales and profits of firms. 
B)  adverse shocks to international trade. 
C)  changes in the growth rate in the quantity of money. 
D)  changes in growth rate in productivity.

Question 13

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

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  both Figure A and Figure B 
D)  neither Figure A nor Figure B 
A)  Figure A 
B)  Figure B 
C)  both Figure A and Figure B 
D)  neither Figure A nor Figure B

Question 14

Cost- push inflation might start with

Accepted Answer

A)  a rise in money wage rates. 
B)  an increase in the quantity of money. 
C)  a fall in the prices of raw materials. 
D)  an increase in government expenditures. 
A)  a rise in money wage rates. 
B)  an increase in the quantity of money. 
C)  a fall in the prices of raw materials. 
D)  an increase in government expenditures.

Question 15

A decrease in the natural unemployment rate shifts the long- run Phillips curve
The short- run Phillips curve.

Accepted Answer

A)  leftward; shifts rightward 
B)  rightward; shifts rightward 
C)  leftward; shifts leftward 
D)  rightward; does not shift 
A)  leftward; shifts rightward 
B)  rightward; shifts rightward 
C)  leftward; shifts leftward 
D)  rightward; does not shift

Question 16

Which of the following is a theory that economists use to describe the business cycle?

Accepted Answer

A)  circular flow model 
B)  Keynesian cycle model 
C)  impulse model 
D)  contractionary/expansionary model 
A)  circular flow model 
B)  Keynesian cycle model 
C)  impulse model 
D)  contractionary/expansionary model

Question 17

If Samantha predicts future inflation based on rational expectations, then

Accepted Answer

A)  she uses all relevant information to forecast inflation. 
B)  she never under estimates inflation. 
C)  she looks only to the past to help her predict future inflation. 
D)  her forecast of inflation will always be correct. 
A)  she uses all relevant information to forecast inflation. 
B)  she never under estimates inflation. 
C)  she looks only to the past to help her predict future inflation. 
D)  her forecast of inflation will always be correct.

Question 18

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

Accepted Answer

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

Question 19

-The figure above shows an economy's Phillips curves. Currently, the inflation rate is 6 percent a year. If inflation expectations remain unchanged, the current unemployment rate is _.

Accepted Answer

A)  equal to the natural rate 
B)  less than the natural rate 
C)  greater than the natural rate 
D)  6 percent 
A)  equal to the natural rate 
B)  less than the natural rate 
C)  greater than the natural rate 
D)  6 percent

Question 20

Assuming that GDP currently equals potential GDP, a cost- push inflation could result from which of the following?

Accepted Answer

A)  an increase in the nation's capital stock 
B)  a decrease in tax rates 
C)  an increase in the labor force 
D)  a large crop failure that boosts the prices of raw food materials 
A)  an increase in the nation's capital stock 
B)  a decrease in tax rates 
C)  an increase in the labor force 
D)  a large crop failure that boosts the prices of raw food materials

The SAS curve shifts leftward if

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

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

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

The factor that leads to business cycles in the real business cycle theory is changes in

For a cost- push inflation to occur, oil price increases must be accompanied by

According to which theory of the business cycle do changes in the quantity of money never play a role in helping to explaining fluctuations in real variables?

A demand- pull inflation requires persistent increases in

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

The short- run Phillips curve shows

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

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

Cost- push inflation might start with

A decrease in the natural unemployment rate shifts the long- run Phillips curve The short- run Phillips curve.

Which of the following is a theory that economists use to describe the business cycle?

If Samantha predicts future inflation based on rational expectations, then

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

-The figure above shows an economy's Phillips curves. Currently, the inflation rate is 6 percent a year. If inflation expectations remain unchanged, the current unemployment rate is _.

Assuming that GDP currently equals potential GDP, a cost- push inflation could result from which of the following?

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: They Keynesian Model

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

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

The SAS curve shifts leftward if

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

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

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

The factor that leads to business cycles in the real business cycle theory is changes in

For a cost- push inflation to occur, oil price increases must be accompanied by

According to which theory of the business cycle do changes in the quantity of money never play a role in helping to explaining fluctuations in real variables?

A demand- pull inflation requires persistent increases in

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

The short- run Phillips curve shows

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

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

Cost- push inflation might start with

A decrease in the natural unemployment rate shifts the long- run Phillips curve The short- run Phillips curve.

Which of the following is a theory that economists use to describe the business cycle?

If Samantha predicts future inflation based on rational expectations, then

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

-The figure above shows an economy's Phillips curves. Currently, the inflation rate is 6 percent a year. If inflation expectations remain unchanged, the current unemployment rate is _.

Assuming that GDP currently equals potential GDP, a cost- push inflation could result from which of the following?

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: They Keynesian Model

Fiscal Policy

Monetary Policy

International Trade Policy

Filters