Question 1

A decrease in the expected inflation rate leads to _ in the long- run Phillips curve and
In the short- run Phillips curve.

Accepted Answer

A)  a leftward shift; an upward shift 
B)  no shift; a downward shift 
C)  no shift; no shift 
D)  an upward shift; no shift 
A)  a leftward shift; an upward shift 
B)  no shift; a downward shift 
C)  no shift; no shift 
D)  an upward shift; no shift

Question 2

Along the long- run Phillips curve,

Accepted Answer

A)  actual inflation is less than expected inflation. 
B)  actual inflation is greater than expected inflation. 
C)  actual inflation is equal to expected inflation. 
D)  None of the above answers is correct. 
A)  actual inflation is less than expected inflation. 
B)  actual inflation is greater than expected inflation. 
C)  actual inflation is equal to expected inflation. 
D)  None of the above answers is correct.

Question 3

Which of the following are TRUE?
I. New Keynesian economists believe that money wage rates are influenced by rational expectatio the price level.
II. New classical economists believe that money wage rates are influenced by rational expectations price level.
III. New classical economists believe expected changes in aggregate demand trigger business cycles

Accepted Answer

A)  II and III 
B)  I, II and III 
C)  I and III 
D)  I and II 
A)  II and III 
B)  I, II and III 
C)  I and III 
D)  I and II

Question 4

The short- run Phillips curve gives much the same information as

Accepted Answer

A)  the LAS curve. 
B)  the SAS curve. 
C)  the AD curve. 
D)  none of the above 
A)  the LAS curve. 
B)  the SAS curve. 
C)  the AD curve. 
D)  none of the above

Question 5

For a given level of anticipated inflation and natural unemployment rate, the short- run Phillips curve shows the relationship between

Accepted Answer

A)  inflation and the unemployment rate. 
B)  real GDP growth and the unemployment rate. 
C)  potential GDP and real GDP. 
D)  inflation and money growth. 
A)  inflation and the unemployment rate. 
B)  real GDP growth and the unemployment rate. 
C)  potential GDP and real GDP. 
D)  inflation and money growth.

Question 6

The initial factors that can create a cost- push inflation do NOT include

Accepted Answer

A)  increases in the money prices of raw materials. 
B)  increases in the quantity of money. 
C)  increases in money wage rates. 
D)  None of the above answers is correct because all of the above could be the initial cause of a cost- push inflation. 
A)  increases in the money prices of raw materials. 
B)  increases in the quantity of money. 
C)  increases in money wage rates. 
D)  None of the above answers is correct because all of the above could be the initial cause of a cost- push inflation.

Question 7

When there is a cost- push inflation,

Accepted Answer

A)  the short- run aggregate supply curve shifts rightward. 
B)  workers demand higher money wages because of the inflation. 
C)  the aggregate demand curve shifts leftward because of the cost hikes. 
D)  None of the above answers is correct. 
A)  the short- run aggregate supply curve shifts rightward. 
B)  workers demand higher money wages because of the inflation. 
C)  the aggregate demand curve shifts leftward because of the cost hikes. 
D)  None of the above answers is correct.

Question 8

Which of the following is TRUE regarding the monetarist theory of the business cycle?
I. Monetarists assume that the quantity of money increases at a constant rate.
II. Fluctuations in interest rates cause business cycles.
III. Changes in the growth rate of the quantity of money affect aggregate demand.

Accepted Answer

A)  III only 
B)  II and III 
C)  I only 
D)  I and II 
A)  III only 
B)  II and III 
C)  I only 
D)  I and II

Question 9

The long- run Phillips curve shows the relationship between the inflation rate and the unemployment rate when the

Accepted Answer

A)  actual inflation rate equals the expected inflation rate. 
B)  real interest rate equals the nominal interest rate. 
C)  real interest rate is zero. 
D)  inflation rate is zero. 
A)  actual inflation rate equals the expected inflation rate. 
B)  real interest rate equals the nominal interest rate. 
C)  real interest rate is zero. 
D)  inflation rate is zero.

Question 10

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

Accepted Answer

A)  Real GDP will be more than potential GDP. 
B)  Real GDP will be less than potential GDP. 
C)  The price level will fall. 
D)  Both answers A and B are correct. 
A)  Real GDP will be more than potential GDP. 
B)  Real GDP will be less than potential GDP. 
C)  The price level will fall. 
D)  Both answers A and B are correct.

Question 11

The intertemporal substitution effect is the factor that creates business cycles in the Keynesian theory of the business cycle.

Accepted Answer

A) True 
 B)False

Question 12

A rise in the expected inflation rate leads to _ in the long- run Phillips curve and in the short- run Phillips curve.

Accepted Answer

A)  a leftward shift; an upward shift 
B)  no shift; no shift 
C)  an upward shift; no shift 
D)  no shift; an upward shift 
A)  a leftward shift; an upward shift 
B)  no shift; no shift 
C)  an upward shift; no shift 
D)  no shift; an upward shift

Question 13

At the start of a cost- push inflation,

Accepted Answer

A)  the short- run aggregate supply curve shifts rightward. 
B)  prices and unemployment are rising. 
C)  productivity rises. 
D)  real GDP increases faster than the quantity of money. 
A)  the short- run aggregate supply curve shifts rightward. 
B)  prices and unemployment are rising. 
C)  productivity rises. 
D)  real GDP increases faster than the quantity of money.

Question 14

Cost- push inflation starts with a

Accepted Answer

A)  raising GDP and rising unemployment rate. 
B)  raising GDP and falling unemployment rate. 
C)  falling GDP and rising unemployment rate. 
D)  falling GDP and falling unemployment rate. 
A)  raising GDP and rising unemployment rate. 
B)  raising GDP and falling unemployment rate. 
C)  falling GDP and rising unemployment rate. 
D)  falling GDP and falling unemployment rate.

Question 15

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

Accepted Answer

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

Question 16

As far as demand- pull inflation goes, the United States

Accepted Answer

A)  has never experienced this type of inflation. 
B)  experienced this type of inflation during the 1950s. 
C)  experienced this type of inflation during the 1990s. 
D)  experienced this type of inflation during the 1960s. 
A)  has never experienced this type of inflation. 
B)  experienced this type of inflation during the 1950s. 
C)  experienced this type of inflation during the 1990s. 
D)  experienced this type of inflation during the 1960s.

Question 17

The long- run Phillips curve is

Accepted Answer

A)  the vertical sum of the short- run Phillips curves. 
B)  the horizontal sum of the short- run Phillips curves. 
C)  vertical at the natural unemployment rate. 
D)  vertical at potential GDP. 
A)  the vertical sum of the short- run Phillips curves. 
B)  the horizontal sum of the short- run Phillips curves. 
C)  vertical at the natural unemployment rate. 
D)  vertical at potential GDP.

Question 18

According to the real business cycle theory, technological change

Accepted Answer

A)  is caused by changes in productivity. 
B)  can initially decrease productivity. 
C)  always increases productivity. 
D)  never increases productivity. 
A)  is caused by changes in productivity. 
B)  can initially decrease productivity. 
C)  always increases productivity. 
D)  never increases productivity.

Question 19

In real business cycle models, in order to increase real GDP after a negative technology shock, the government can
I. increase the quantity of money.
II. decrease the quantity of money.

Accepted Answer

A)  only I 
B)  only II 
C)  both I and II 
D)  neither I nor II 
A)  only I 
B)  only II 
C)  both I and II 
D)  neither I nor II

Question 20

-Using the above figure, a recession in the monetarist model would start with a

Accepted Answer

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

A decrease in the expected inflation rate leads to _ in the long- run Phillips curve and In the short- run Phillips curve.

Along the long- run Phillips curve,

The short- run Phillips curve gives much the same information as

For a given level of anticipated inflation and natural unemployment rate, the short- run Phillips curve shows the relationship between

The initial factors that can create a cost- push inflation do NOT include

When there is a cost- push inflation,

The long- run Phillips curve shows the relationship between the inflation rate and the unemployment rate when the

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

The intertemporal substitution effect is the factor that creates business cycles in the Keynesian theory of the business cycle.

A rise in the expected inflation rate leads to _ in the long- run Phillips curve and in the short- run Phillips curve.

At the start of a cost- push inflation,

Cost- push inflation starts with a

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

As far as demand- pull inflation goes, the United States

The long- run Phillips curve is

According to the real business cycle theory, technological change

In real business cycle models, in order to increase real GDP after a negative technology shock, the government can I. increase the quantity of money. II. decrease the quantity of money.

-Using the above figure, a recession in the monetarist model would start with a

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

A decrease in the expected inflation rate leads to _ in the long- run Phillips curve and In the short- run Phillips curve.

Along the long- run Phillips curve,

The short- run Phillips curve gives much the same information as

For a given level of anticipated inflation and natural unemployment rate, the short- run Phillips curve shows the relationship between

The initial factors that can create a cost- push inflation do NOT include

When there is a cost- push inflation,

The long- run Phillips curve shows the relationship between the inflation rate and the unemployment rate when the

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

The intertemporal substitution effect is the factor that creates business cycles in the Keynesian theory of the business cycle.

A rise in the expected inflation rate leads to _ in the long- run Phillips curve and in the short- run Phillips curve.

At the start of a cost- push inflation,

Cost- push inflation starts with a

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

As far as demand- pull inflation goes, the United States

The long- run Phillips curve is

According to the real business cycle theory, technological change

In real business cycle models, in order to increase real GDP after a negative technology shock, the government can I. increase the quantity of money. II. decrease the quantity of money.

-Using the above figure, a recession in the monetarist model would start with a

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