Question 1

The new Keynesian cycle theory of the business cycle regards as the main source of economic fluctuations.

Accepted Answer

A)  expected fluctuations in aggregate supply 
B)  unexpected fluctuations in aggregate demand 
C)  changes in business confidence 
D)  expected and unexpected fluctuations in aggregate demand 
A)  expected fluctuations in aggregate supply 
B)  unexpected fluctuations in aggregate demand 
C)  changes in business confidence 
D)  expected and unexpected fluctuations in aggregate demand

Question 2

Stagflation is the result of

Accepted Answer

A)  an increase in short- run aggregate supply. 
B)  an increase in aggregate demand. 
C)  a decrease in aggregate demand. 
D)  a decrease in short- run aggregate supply. 
A)  an increase in short- run aggregate supply. 
B)  an increase in aggregate demand. 
C)  a decrease in aggregate demand. 
D)  a decrease in short- run aggregate supply.

Question 3

The key difference between the new classical theory of the business cycle and the new Keynesian theory of the business cycle is that the new classical theory believes that while the new Keynesian theory believes that .

Accepted Answer

A)  only unexpected changes in aggregate demand will change real GDP; both expected and unexpected changes in aggregate demand will change real GDP 
B)  expected changes in aggregate demand will change real GDP; expected changes in aggregate demand will not change real GDP 
C)  only unexpected changes in aggregate demand will change real GDP; only expected changes in aggregate demand will change real GDP 
D)  the short- run aggregate supply curve is horizontal; the short- run aggregate supply curve is vertical. 
A)  only unexpected changes in aggregate demand will change real GDP; both expected and unexpected changes in aggregate demand will change real GDP 
B)  expected changes in aggregate demand will change real GDP; expected changes in aggregate demand will not change real GDP 
C)  only unexpected changes in aggregate demand will change real GDP; only expected changes in aggregate demand will change real GDP 
D)  the short- run aggregate supply curve is horizontal; the short- run aggregate supply curve is vertical.

Question 4

What is a cost- push inflation?

Accepted Answer

A cost- push inflation is an i

Question 5

According to monetarists, the key determinant of expansions and recessions is

Accepted Answer

A)  the rate of change in interest rates. 
B)  the ineptitude of politicians to enact appropriate fiscal policies. 
C)  the rate of growth of the quantity of money. 
D)  All of the above answers are correct. 
A)  the rate of change in interest rates. 
B)  the ineptitude of politicians to enact appropriate fiscal policies. 
C)  the rate of growth of the quantity of money. 
D)  All of the above answers are correct.

Question 6

A higher price for oil shifts the

Accepted Answer

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

Question 7

Real business cycle theory explains changes in employment and output by focusing on

Accepted Answer

A)  the interaction of fiscal and monetary policies. 
B)  changes in monetary policy. 
C)  changes in fiscal policy. 
D)  changes in productivity. 
A)  the interaction of fiscal and monetary policies. 
B)  changes in monetary policy. 
C)  changes in fiscal policy. 
D)  changes in productivity.

Question 8

The factor leading to business cycles in the Keynesian model is .

Accepted Answer

A)  unanticipated changes in aggregate demand 
B)  unanticipated changes in aggregate supply 
C)  a speed up in money growth 
D)  changes in business confidence 
A)  unanticipated changes in aggregate demand 
B)  unanticipated changes in aggregate supply 
C)  a speed up in money growth 
D)  changes in business confidence

Question 9

Business cycle events that arise solely from aggregate demand shifts are emphasized by the

Accepted Answer

A)  Keynesian and monetarist cycle theories. 
B)  monetarist and real business cycle theories. 
C)  Keynesian and real business cycle theories. 
D)  none of the major theories 
A)  Keynesian and monetarist cycle theories. 
B)  monetarist and real business cycle theories. 
C)  Keynesian and real business cycle theories. 
D)  none of the major theories

Question 10

Which of the following is the factor the creates business cycles in the real business cycle theory?

Accepted Answer

A)  an unexpected change in aggregate demand 
B)  a change by the Fed in the growth rate of the quantity of money 
C)  a change in the growth rate of productivity 
D)  a change in expectations about future sales and profits 
A)  an unexpected change in aggregate demand 
B)  a change by the Fed in the growth rate of the quantity of money 
C)  a change in the growth rate of productivity 
D)  a change in expectations about future sales and profits

Question 11

According to real business proponents, in an increase in productivity the demand for loanable funds, _ the demand for labor, and the supply of labor. The real interest rate will .

Accepted Answer

A)  decreases; decreases; decreases; fall 
B)  increases; increases; increases; rise 
C)  increases; increases; there is no change in; fall 
D)  increases; increases; there is no change in; rise 
A)  decreases; decreases; decreases; fall 
B)  increases; increases; increases; rise 
C)  increases; increases; there is no change in; fall 
D)  increases; increases; there is no change in; rise

Question 12

In a demand- pull inflation, if the Fed stops expanding the quantity of money,

Accepted Answer

A)  government expenditure will cause the demand- pull inflation to continue. 
B)  the demand- pull inflation ends. 
C)  a cost- push inflation will occur. 
D)  a deflation will occur. 
A)  government expenditure will cause the demand- pull inflation to continue. 
B)  the demand- pull inflation ends. 
C)  a cost- push inflation will occur. 
D)  a deflation will occur.

Question 13

In real business cycle models, business cycles exist because of

Accepted Answer

A)  repeated errors by Congress in timing policy changes. 
B)  policy errors by the Fed. 
C)  changes in technology. 
D)  frequent changes in the public's labor supply. 
A)  repeated errors by Congress in timing policy changes. 
B)  policy errors by the Fed. 
C)  changes in technology. 
D)  frequent changes in the public's labor supply.

Question 14

-In the above figure, the economy is at point A. An increase in money wage rates that sets off a cost- push inflation will initially move the economy from point A to point

Accepted Answer

A)  A, that is, the economy does not change. 
B)  B. 
C)  C. 
D)  D. 
A)  A, that is, the economy does not change. 
B)  B. 
C)  C. 
D)  D.

Question 15

-In the above figure, the economy is initially at point A. Which point best represents the short- run response to a decrease in the growth rate of the quantity of money, according to the monetarists?

Accepted Answer

A)  A, that is, there is no change. 
B)  B 
C)  C 
D)  D 
A)  A, that is, there is no change. 
B)  B 
C)  C 
D)  D

Question 16

For a demand- pull inflation spiral to occur, government expenditure must persistently increase.

Accepted Answer

A) True 
 B)False

Question 17

-In the above figure, suppose that the economy is at point A when foreign countries begin an expansion and buy more U.S.- made goods. In the short run, this change creates a movement to point and an eventual increase in .

Accepted Answer

A)  D; money wage rates 
B)  B; the natural unemployment rate 
C)  B; money wage rates 
D)  D; the natural unemployment rate 
A)  D; money wage rates 
B)  B; the natural unemployment rate 
C)  B; money wage rates 
D)  D; the natural unemployment rate

Question 18

Initially in a cost- push inflation

Accepted Answer

A)  the price level and real GDP both increase. 
B)  the price level rises and real GDP decreases. 
C)  only real GDP changes while the price level remains constant. 
D)  All of the above answers are correct. 
A)  the price level and real GDP both increase. 
B)  the price level rises and real GDP decreases. 
C)  only real GDP changes while the price level remains constant. 
D)  All of the above answers are correct.

Question 19

One assumption of the new classical model is that

Accepted Answer

A)  markets are not purely competitive. 
B)  people make rational expectations about aggregate demand. 
C)  money wage rates are rigid. 
D)  prices are "sticky" upward. 
A)  markets are not purely competitive. 
B)  people make rational expectations about aggregate demand. 
C)  money wage rates are rigid. 
D)  prices are "sticky" upward.

Question 20

A Phillips curve shows the relationship between the

Accepted Answer

A)  unemployment rate and real GDP. 
B)  inflation rate and the unemployment rate. 
C)  price level and real GDP. 
D)  inflation rate and real GDP. 
A)  unemployment rate and real GDP. 
B)  inflation rate and the unemployment rate. 
C)  price level and real GDP. 
D)  inflation rate and real GDP.

The new Keynesian cycle theory of the business cycle regards as the main source of economic fluctuations.

Stagflation is the result of

The key difference between the new classical theory of the business cycle and the new Keynesian theory of the business cycle is that the new classical theory believes that while the new Keynesian theory believes that .

What is a cost- push inflation?

According to monetarists, the key determinant of expansions and recessions is

A higher price for oil shifts the

Real business cycle theory explains changes in employment and output by focusing on

The factor leading to business cycles in the Keynesian model is .

Business cycle events that arise solely from aggregate demand shifts are emphasized by the

Which of the following is the factor the creates business cycles in the real business cycle theory?

According to real business proponents, in an increase in productivity the demand for loanable funds, _ the demand for labor, and the supply of labor. The real interest rate will .

In a demand- pull inflation, if the Fed stops expanding the quantity of money,

In real business cycle models, business cycles exist because of

-In the above figure, the economy is at point A. An increase in money wage rates that sets off a cost- push inflation will initially move the economy from point A to point

-In the above figure, the economy is initially at point A. Which point best represents the short- run response to a decrease in the growth rate of the quantity of money, according to the monetarists?

For a demand- pull inflation spiral to occur, government expenditure must persistently increase.

-In the above figure, suppose that the economy is at point A when foreign countries begin an expansion and buy more U.S.- made goods. In the short run, this change creates a movement to point and an eventual increase in .

Initially in a cost- push inflation

One assumption of the new classical model is that

A Phillips curve shows the relationship between the

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 new Keynesian cycle theory of the business cycle regards as the main source of economic fluctuations.

Stagflation is the result of

The key difference between the new classical theory of the business cycle and the new Keynesian theory of the business cycle is that the new classical theory believes that while the new Keynesian theory believes that .

What is a cost- push inflation?

According to monetarists, the key determinant of expansions and recessions is

A higher price for oil shifts the

Real business cycle theory explains changes in employment and output by focusing on

The factor leading to business cycles in the Keynesian model is .

Business cycle events that arise solely from aggregate demand shifts are emphasized by the

Which of the following is the factor the creates business cycles in the real business cycle theory?

According to real business proponents, in an increase in productivity the demand for loanable funds, _ the demand for labor, and the supply of labor. The real interest rate will .

In a demand- pull inflation, if the Fed stops expanding the quantity of money,

In real business cycle models, business cycles exist because of

-In the above figure, the economy is at point A. An increase in money wage rates that sets off a cost- push inflation will initially move the economy from point A to point

-In the above figure, the economy is initially at point A. Which point best represents the short- run response to a decrease in the growth rate of the quantity of money, according to the monetarists?

For a demand- pull inflation spiral to occur, government expenditure must persistently increase.

-In the above figure, suppose that the economy is at point A when foreign countries begin an expansion and buy more U.S.- made goods. In the short run, this change creates a movement to point and an eventual increase in .

Initially in a cost- push inflation

One assumption of the new classical model is that

A Phillips curve shows the relationship between the

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