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

-In the above figure, the economy is at point A. The inflation rate falls by two percentage points and people correctly expected the fall. As a result, the economy moves to point

If Samantha predicts future inflation based on rational expectations, then

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

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

The __________states that the main source of economic fluctuations is volatile business confidence.

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

What was the U.S. experience with demand pull inflation during the 1960s and early 1970s?

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

The short-run Phillips curve intersects the long-run Phillips curve at the expected inflation rate.

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 __________.

The short-run Phillips curve is vertical at the natural unemployment rate.

In monetarist business cycle theory, increases in money growth temporarily__________ real GDP and __________the price level.

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

The monetarist theory of the business cycle views fluctuations in the growth rate of the quantity of money as the main source of economic fluctuations.

Stagflation results from

Suppose that a shock causes the aggregate demand curve to shift rightward. If the Fed does nothing,

A criticism of the real business cycle RBC) theory is that

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

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

Real business cycle theory says that the factor leading to the business cycle is changes in