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

Critics of the real business cycle model argue that

Fluctuations in business confidence is the factor leading to business cycles in the .

When the AD and SAS curves intersect at a level of real GDP which exceeds potential GDP and there is no government policy undertaken, which of the following will occur?

Evidence indicates that a recession occurs at about the same time as a decrease in investment. According to the monetarist theory, the decrease in investment is attributable to

According to the real business cycle theory, which do people consider when deciding when to work?

Which of the following would shift the aggregate demand curve leftward year after year?

What, according to the monetarist theory of the business cycle, leads to changes in real GDP?

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

In a story from HYPERLINK "http://www.ft.com/" www.ft.com (1/31/2005) describing Ireland's transformation to a prosperous economy it was noted that "Ireland's story is unique: a small, English- speaking, non- industrialised country on the edge of Europe was able to secure structural funds from the EU, cut taxes, ... and attr of foreign companies in the process." As these policies were implemented investment steadily incr in Ireland. The best describes the business cycle in Ireland.

In real business cycle theory, all of the following events can be sources of fluctuations in productivity EXCEPT .

If people correctly expect an increase in aggregate demand, their money wage rate immediately, the SAS curve shifts .

An increase in the world price of oil will result in _ .

The factor leading to business cycles according to the real business cycle theory is changes in

Which of the following could NOT start a demand- pull inflation?

In the real business cycle model, the quantity of money

The factor leading to business cycles in the real business cycle theory is changes in the growth rate of

"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 fueled 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 type of inflation described in the story

An initial increase in aggregate demand that is NOT followed by an increase in the quantity of money results in a long- run equilibrium with

If people correctly anticipate an increase in government expenditures on goods and services so that their money wage rate adjusts immediately, then, assuming the economy is initially at potential GDP,

-In the above figure, the economy is at point A. The inflation rate falls by two percentage points and people correctly anticipated the fall, perhaps because they correctly anticipated the Fed's monetary policy. As a result, the economy moves to point