Question 1

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

Accepted Answer

A)  real business cycle theory 
B)  Keynesian cycle theory 
C)  new Keynesian cycle theory 
D)  monetarist cycle theory 
A)  real business cycle theory 
B)  Keynesian cycle theory 
C)  new Keynesian cycle theory 
D)  monetarist cycle theory

Question 2

The SAS curve shifts leftward if

Accepted Answer

A)  the money wage rate increases. 
B)  OPEC reduces world oil prices. 
C)  tax cuts stimulate labor supply. 
D)  good weather increases agricultural harvests. 
A)  the money wage rate increases. 
B)  OPEC reduces world oil prices. 
C)  tax cuts stimulate labor supply. 
D)  good weather increases agricultural harvests.

Question 3

In the short run, if there is an increase in the money wage rate, then

Accepted Answer

A)  aggregate demand increases and the price level rises. 
B)  short-run aggregate supply increases and the price level rises. 
C)  short-run aggregate supply decreases and the price level rises. 
D)  aggregate demand decreases and the price level falls. 
A)  aggregate demand increases and the price level rises. 
B)  short-run aggregate supply increases and the price level rises. 
C)  short-run aggregate supply decreases and the price level rises. 
D)  aggregate demand decreases and the price level falls.

Question 4

Which theory emphasizes frequent changes in investment because of ʺanimal spiritsʺ as the main source of economic fluctuations?

Accepted Answer

A)  new classical cycle theory 
B)  real business cycle theory 
C)  Keynesian cycle theory 
D)  monetarist cycle theory 
A)  new classical cycle theory 
B)  real business cycle theory 
C)  Keynesian cycle theory 
D)  monetarist cycle theory

Question 5

To prevent cost-push inflation

Accepted Answer

A)  interest rates must not rise. 
B)  the Fed must not let the quantity of money rise persistently. 
C)  there must not be an excess demand for money. 
D)  there must not be an increase in government purchases. 
A)  interest rates must not rise. 
B)  the Fed must not let the quantity of money rise persistently. 
C)  there must not be an excess demand for money. 
D)  there must not be an increase in government purchases.

Question 6

Suppose oil prices rise and short-run aggregate supply decreases. If the Fed responds by increasing the quantity of money, then in the short run

Accepted Answer

A)  real GDP increases and the price level rises still higher. 
B)  the Fed is more concerned about fighting inflation than unemployment. 
C)  real GDP increases and the price level falls. 
D)  None of the above answers is correct. 
A)  real GDP increases and the price level rises still higher. 
B)  the Fed is more concerned about fighting inflation than unemployment. 
C)  real GDP increases and the price level falls. 
D)  None of the above answers is correct.

Question 7

ʺThe short-run Phillips curve is vertical at the natural unemployment rate.ʺ Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect. Th

Question 8

Cost-push inflation starts with a

Accepted Answer

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

Question 9

Which of the following theories is criticized for assuming the money wage rate is not sticky?

Accepted Answer

A)  real business cycle theory 
B)  monetarist cycle theory 
C)  new Keynesian cycle theory 
D)  Keynesian cycle theory 
A)  real business cycle theory 
B)  monetarist cycle theory 
C)  new Keynesian cycle theory 
D)  Keynesian cycle theory

Question 10

An increase in the price of a resource such as oil
I. shifts the aggregate demand curve leftward.
II. shifts the long-run aggregate supply curve rightward.
III. shifts the short-run aggregate supply curve leftward.
IV. increases the price level and decreases real GDP in the short run.

Accepted Answer

A)  Only I is correct. 
B)  Only III is correct. 
C)  Both III and IV are correct. 
D)  Both I and II are correct. 
A)  Only I is correct. 
B)  Only III is correct. 
C)  Both III and IV are correct. 
D)  Both I and II are correct.

Question 11

The business cycle impulse in the new classical theory of the business cycle is

Accepted Answer

A)  expected changes in aggregate demand. 
B)  unexpected changes in aggregate demand. 
C)  fluctuations in money growth with rigid wages. 
D)  fluctuations in investment coupled with rigid wages. 
A)  expected changes in aggregate demand. 
B)  unexpected changes in aggregate demand. 
C)  fluctuations in money growth with rigid wages. 
D)  fluctuations in investment coupled with rigid wages.

Question 12

What is the impulse in the real business cycle theory of the business cycle?

Accepted Answer

The impulse in the real busine

Question 13

A higher price for oil shifts the

Accepted Answer

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

Question 14

The term ʺstagflationʺ refers to the situation when

Accepted Answer

A)  the short-run aggregate supply curve and the aggregate demand curve shift in opposite directions. 
B)  prices become stagnant and do not increase or decrease. 
C)  real GDP and the price level both rise because of an increase in aggregate demand. 
D)  the aggregate supply curve shifts leftward, prices increase and real GDP decreases. 
A)  the short-run aggregate supply curve and the aggregate demand curve shift in opposite directions. 
B)  prices become stagnant and do not increase or decrease. 
C)  real GDP and the price level both rise because of an increase in aggregate demand. 
D)  the aggregate supply curve shifts leftward, prices increase and real GDP decreases.

Question 15

In a demand-pull inflation, money wage rates rise because

Accepted Answer

A)  an increase in aggregate demand creates a labor shortage. 
B)  a decrease in aggregate demand creates a labor surplus. 
C)  a decrease in aggregate demand creates a labor shortage. 
D)  an increase in aggregate demand creates a labor surplus. 
A)  an increase in aggregate demand creates a labor shortage. 
B)  a decrease in aggregate demand creates a labor surplus. 
C)  a decrease in aggregate demand creates a labor shortage. 
D)  an increase in aggregate demand creates a labor surplus.

Question 16

ʺThe short-run Phillips curve shows the relationship between real GDP and inflation.ʺ Is the previous statement correct or incorrect? Briefly explain you answer.

Accepted Answer

The statement is incorrect. Th

Question 17

-In the above figure, suppose the economy has moved from point A to point C. According to the monetarist theory of the business cycle, what could have caused this movement?

Accepted Answer

A)  a decrease in the growth rate of the quantity of money 
B)  an increase in the growth rate of the quantity of money 
C)  an increase in the money wage rate 
D)  an increase in uncertainty 
A)  a decrease in the growth rate of the quantity of money 
B)  an increase in the growth rate of the quantity of money 
C)  an increase in the money wage rate 
D)  an increase in uncertainty

Question 18

By itself, an increase in the price of oil shifts the

Accepted Answer

A)  short-run aggregate supply curve leftward and does not shift the aggregate demand curve. 
B)  aggregate demand curve leftward and does not shift the short-run aggregate supply curve. 
C)  aggregate demand curve rightward and does not shift the short-run aggregate supply curve. 
D)  short-run aggregate supply curve rightward and does not shift the aggregate demand curve. 
A)  short-run aggregate supply curve leftward and does not shift the aggregate demand curve. 
B)  aggregate demand curve leftward and does not shift the short-run aggregate supply curve. 
C)  aggregate demand curve rightward and does not shift the short-run aggregate supply curve. 
D)  short-run aggregate supply curve rightward and does not shift the aggregate demand curve.

Question 19

Demand-pull inflation could start with

Accepted Answer

A)  an increase in government expenditure followed by an increase in the money wage rate. 
B)  a decrease in exports followed by a decrease in the quantity of money. 
C)  a rise in prices of raw materials followed by an increase in the quantity of money. 
D)  an increase in the quantity of money followed by a decrease in the money wage rate. 
A)  an increase in government expenditure followed by an increase in the money wage rate. 
B)  a decrease in exports followed by a decrease in the quantity of money. 
C)  a rise in prices of raw materials followed by an increase in the quantity of money. 
D)  an increase in the quantity of money followed by a decrease in the money wage rate.

Question 20

The real business cycle RBC) theory assets that the impact on real GDP of technological change is

Accepted Answer

A)  always negative. 
B)  nonexistent. 
C)  always positive. 
D)  usually positive but occasionally negative. 
A)  always negative. 
B)  nonexistent. 
C)  always positive. 
D)  usually positive but occasionally negative.

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

The SAS curve shifts leftward if

In the short run, if there is an increase in the money wage rate, then

Which theory emphasizes frequent changes in investment because of ʺanimal spiritsʺ as the main source of economic fluctuations?

To prevent cost-push inflation

Suppose oil prices rise and short-run aggregate supply decreases. If the Fed responds by increasing the quantity of money, then in the short run

ʺThe short-run Phillips curve is vertical at the natural unemployment rate.ʺ Is the previous statement correct or incorrect?

Cost-push inflation starts with a

Which of the following theories is criticized for assuming the money wage rate is not sticky?

An increase in the price of a resource such as oil I. shifts the aggregate demand curve leftward. II. shifts the long-run aggregate supply curve rightward. III. shifts the short-run aggregate supply curve leftward. IV. increases the price level and decreases real GDP in the short run.

The business cycle impulse in the new classical theory of the business cycle is

What is the impulse in the real business cycle theory of the business cycle?

A higher price for oil shifts the

The term ʺstagflationʺ refers to the situation when

In a demand-pull inflation, money wage rates rise because

ʺThe short-run Phillips curve shows the relationship between real GDP and inflation.ʺ Is the previous statement correct or incorrect? Briefly explain you answer.

-In the above figure, suppose the economy has moved from point A to point C. According to the monetarist theory of the business cycle, what could have caused this movement?

By itself, an increase in the price of oil shifts the

Demand-pull inflation could start with

The real business cycle RBC) theory assets that the impact on real GDP of technological change is

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: the Keynesian Model

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters

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

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

The SAS curve shifts leftward if

In the short run, if there is an increase in the money wage rate, then

Which theory emphasizes frequent changes in investment because of ʺanimal spiritsʺ as the main source of economic fluctuations?

To prevent cost-push inflation

Suppose oil prices rise and short-run aggregate supply decreases. If the Fed responds by increasing the quantity of money, then in the short run

ʺThe short-run Phillips curve is vertical at the natural unemployment rate.ʺ Is the previous statement correct or incorrect?

Cost-push inflation starts with a

Which of the following theories is criticized for assuming the money wage rate is not sticky?

An increase in the price of a resource such as oil I. shifts the aggregate demand curve leftward. II. shifts the long-run aggregate supply curve rightward. III. shifts the short-run aggregate supply curve leftward. IV. increases the price level and decreases real GDP in the short run.

The business cycle impulse in the new classical theory of the business cycle is

What is the impulse in the real business cycle theory of the business cycle?

A higher price for oil shifts the

The term ʺstagflationʺ refers to the situation when

In a demand-pull inflation, money wage rates rise because

ʺThe short-run Phillips curve shows the relationship between real GDP and inflation.ʺ Is the previous statement correct or incorrect? Briefly explain you answer.

-In the above figure, suppose the economy has moved from point A to point C. According to the monetarist theory of the business cycle, what could have caused this movement?

By itself, an increase in the price of oil shifts the

Demand-pull inflation could start with

The real business cycle RBC) theory assets that the impact on real GDP of technological change is

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: the Keynesian Model

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters