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

Which of the following leads to an rightward shift in the short- run Phillips curve? I. a reduction in inflationary expectations II. an increase in the natural unemployment rate

An increase in the expected inflation rate shifts the

If the real interest rate is 2 percent and workers expect real wages to be 4 percent higher next year, according to real business cycle theory, workers will work

"Inflation Gives Saudis Food for Thought" "My boss sent me back to return the milk - it's too expensive," said the Pakistani driver for a middle Saudi family at the checkout counter of the Al- Othaim supermarket. Saudi Arabia is enjoying an Unprecedented economic boom fuelled by record oil prices, ...as sectors [have] increased activity to the big internal demand. " HYPERLINK "http://www.ft.com/" www.ft.com, 1/18/200 The story describes

Oil prices were pushed much higher twice during the 1970s. The Fed responded by allowing the quantity of money to grow rapidly

Critics of the real business cycle theory claim that

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

Suppose that forecasters have incorrectly estimated aggregate demand. According to the , this mistake could trigger a business cycle.

According to the new Keynesian cycle theory of the business cycle, which of the following can trigg business cycle expansion? I. an unexpected increase in the quantity of money II. an expected increase in the quantity of money III. an expected increase in government expenditures

The data below show data for Germany including real GDP (in billions of euros) and the price level. In which of the following year(s) did Germany experience inflation?

If the Fed responds to an initial increase in aggregate demand by increasing the quantity of money,

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

Suppose that managers forecasted a large decline in expected sales and profits and so their confidence plummets. According to the , this forecast might start a business cycle.

What is the factor that leads to business cycles in the Keynesian cycle theory?

An increase in the natural unemployment rate shifts _ Phillips curve rightward.

Which of the following is NOT an aggregate demand, mainstream theory of the business cycle?

To stop a demand- pull inflation using monetary policy, you would recommend that the Fed

-In the above figure, which of the following curves represents the long- run Phillips curve?

A one- time increase in aggregate demand creates inflation.

-The figure above shows an economy's Phillips curves. Currently, the inflation rate is 6 percent a year. The natural unemployment rate is percent and the expected inflation rate is Percent a year.