Question 1

Increases in government expenditure can create cost-push inflation.)

Accepted Answer

A) True 
 B)False

Question 2

Which of the following pieces of evidence is most consistent with the monetarist theory?

Accepted Answer

A)  Productivity and GDP move closely together. 
B)  Changes in real GDP and the quantity of money move closely together. 
C)  Labor supply decisions do not seem to depend on real interest rates. 
D)  Money wage rates take some time to adjust to price changes. 
A)  Productivity and GDP move closely together. 
B)  Changes in real GDP and the quantity of money move closely together. 
C)  Labor supply decisions do not seem to depend on real interest rates. 
D)  Money wage rates take some time to adjust to price changes.

Question 3

Suppose that the economy is at full employment and aggregate demand increases by more than it is anticipated to increase. Other things remaining the same, ___________.

Accepted Answer

A)  real GDP remains at potential GDP 
B)  real GDP decreases below potential GDP 
C)  long-run aggregate supply decreases 
D)  real GDP increases above potential GDP 
A)  real GDP remains at potential GDP 
B)  real GDP decreases below potential GDP 
C)  long-run aggregate supply decreases 
D)  real GDP increases above potential GDP

Question 4

In a demand-pull inflation, the AD curve shifts___________ and the SAS curve shifts___________ .

Accepted Answer

A)  leftward; leftward 
B)  rightward; rightward 
C)  leftward; rightward 
D)  rightward; leftward 
A)  leftward; leftward 
B)  rightward; rightward 
C)  leftward; rightward 
D)  rightward; leftward

Question 5

-In the above figure, if the economy moves from point A to point E,

Accepted Answer

A)  money wage rates have increased. 
B)  there may have been demand-pull inflation. 
C)  there has been economic growth. 
D)  Both answers A and B are correct. 
A)  money wage rates have increased. 
B)  there may have been demand-pull inflation. 
C)  there has been economic growth. 
D)  Both answers A and B are correct.

Question 6

The factor that leads to business cycle events within real business cycle theory is

Accepted Answer

A)  adverse shocks to international trade. 
B)  changes in growth rate in productivity. 
C)  changes in the growth rate in the quantity of money. 
D)  changes in expected future sales and profits of firms. 
A)  adverse shocks to international trade. 
B)  changes in growth rate in productivity. 
C)  changes in the growth rate in the quantity of money. 
D)  changes in expected future sales and profits of firms.

Question 7

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

Accepted Answer

A)  an increase in government expenditure 
B)  an increase in the quantity of money 
C)  an increase in exports 
D)  an increase in the money wage rate 
A)  an increase in government expenditure 
B)  an increase in the quantity of money 
C)  an increase in exports 
D)  an increase in the money wage rate

Question 8

Suppose that managers forecasted a large decline in expected sales and profits and so their confidence plummets. According to the __________, this forecast might start a business cycle.

Accepted Answer

A)  circular flow theory 
B)  Keynesian cycle theory 
C)  monetarist cycle theory 
D)  new classical cycle theory 
A)  circular flow theory 
B)  Keynesian cycle theory 
C)  monetarist cycle theory 
D)  new classical cycle theory

Question 9

-The figure above shows an economyʹs Phillips curves. Currently, the inflation rate is 6 percent a year. The natural unemployment rate is___________ percent and the expected inflation rate is___________ Percent a year.

Accepted Answer

A)  6; 6 
B)  6; 4 
C)  4; 6 
D)  6; 10 
A)  6; 6 
B)  6; 4 
C)  4; 6 
D)  6; 10

Question 10

Keynesians believe that

Accepted Answer

A)  the economy will normally operate at full employment. 
B)  aggregate demand changes tend to induce aggregate supply changes, offsetting any effect from changes in government expenditures. 
C)  a change in business confidence can affect the amount of investment in the economy. 
D)  money wage rate adjustments will quickly eliminate unemployment. 
A)  the economy will normally operate at full employment. 
B)  aggregate demand changes tend to induce aggregate supply changes, offsetting any effect from changes in government expenditures. 
C)  a change in business confidence can affect the amount of investment in the economy. 
D)  money wage rate adjustments will quickly eliminate unemployment.

Question 11

ʺThe long-run Phillips curve is vertical at the expected inflation rate.ʺ Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect bec

Question 12

Cost-push inflation might initially result from

Accepted Answer

A)  an increase in government expenditure. 
B)  an increase in the cost of resources. 
C)  the use of new technology. 
D)  an increase in the quantity of money. 
A)  an increase in government expenditure. 
B)  an increase in the cost of resources. 
C)  the use of new technology. 
D)  an increase in the quantity of money.

Question 13

A one-time increase in the price of oil followed by a one-time increase in aggregate demand produce

Accepted Answer

A)  a one-time increase in the price level. 
B)  continuing cost-push inflation. 
C)  a one-time decrease in the price level. 
D)  continuing demand-pull inflation. 
A)  a one-time increase in the price level. 
B)  continuing cost-push inflation. 
C)  a one-time decrease in the price level. 
D)  continuing demand-pull inflation.

Question 14

At the start of a cost-push inflation,

Accepted Answer

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

Question 15

When the price level is rising and simultaneously real GDP is decreasing,

Accepted Answer

A)  stagflation occurs. 
B)  the Fed has increased the discount rate. 
C)  there is an expansionary gap. 
D)  the natural unemployment rate increases. 
A)  stagflation occurs. 
B)  the Fed has increased the discount rate. 
C)  there is an expansionary gap. 
D)  the natural unemployment rate increases.

Question 16

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

Accepted Answer

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

Question 17

When there is a cost-push inflation,

Accepted Answer

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

Question 18

-In the above figure, the economy is initially at point A. If workers and firms correctly anticipate the increase in aggregate demand and the resulting inflation rate, the economy will move to point

Accepted Answer

A)  A, that is, the price level and level of real GDP will not change. 
B)  B. 
C)  C. 
D)  D. 
A)  A, that is, the price level and level of real GDP will not change. 
B)  B. 
C)  C. 
D)  D.

Question 19

To stop a demand-pull inflation using monetary policy, you would recommend that the Fed

Accepted Answer

A)  increase the quantity of money. 
B)  not increase the quantity of money. 
C)  purchase government bonds in the open market. 
D)  increase tax rates. 
A)  increase the quantity of money. 
B)  not increase the quantity of money. 
C)  purchase government bonds in the open market. 
D)  increase tax rates.

Question 20

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?

Accepted Answer

A)  The AD curve shifts leftward because the money wage rate rises. 
B)  The AD curve shifts rightward because the Fed decreases the money supply. 
C)  The SAS curve shifts leftward because the money wage rate rises. 
D)  The AS curve shifts leftward because the money wage rate falls. 
A)  The AD curve shifts leftward because the money wage rate rises. 
B)  The AD curve shifts rightward because the Fed decreases the money supply. 
C)  The SAS curve shifts leftward because the money wage rate rises. 
D)  The AS curve shifts leftward because the money wage rate falls.

Increases in government expenditure can create cost-push inflation.)

Which of the following pieces of evidence is most consistent with the monetarist theory?

Suppose that the economy is at full employment and aggregate demand increases by more than it is anticipated to increase. Other things remaining the same, ___________.

In a demand-pull inflation, the AD curve shifts_ and the SAS curve shifts_ .

-In the above figure, if the economy moves from point A to point E,

The factor that leads to business cycle events within real business cycle theory is

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

Suppose that managers forecasted a large decline in expected sales and profits and so their confidence plummets. According to the __________, this forecast might start a business cycle.

-The figure above shows an economyʹs Phillips curves. Currently, the inflation rate is 6 percent a year. The natural unemployment rate is_ percent and the expected inflation rate is_ Percent a year.

Keynesians believe that

ʺThe long-run Phillips curve is vertical at the expected inflation rate.ʺ Is the previous statement correct or incorrect?

Cost-push inflation might initially result from

A one-time increase in the price of oil followed by a one-time increase in aggregate demand produce

At the start of a cost-push inflation,

When the price level is rising and simultaneously real GDP is decreasing,

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

When there is a cost-push inflation,

-In the above figure, the economy is initially at point A. If workers and firms correctly anticipate the increase in aggregate demand and the resulting inflation rate, the economy will move to point

To stop a demand-pull inflation using monetary policy, you would recommend that the Fed

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?

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

Increases in government expenditure can create cost-push inflation.)

Which of the following pieces of evidence is most consistent with the monetarist theory?

Suppose that the economy is at full employment and aggregate demand increases by more than it is anticipated to increase. Other things remaining the same, ___________.

In a demand-pull inflation, the AD curve shifts___________ and the SAS curve shifts___________ .

-In the above figure, if the economy moves from point A to point E,

The factor that leads to business cycle events within real business cycle theory is

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

Suppose that managers forecasted a large decline in expected sales and profits and so their confidence plummets. According to the __________, this forecast might start a business cycle.

-The figure above shows an economyʹs Phillips curves. Currently, the inflation rate is 6 percent a year. The natural unemployment rate is___________ percent and the expected inflation rate is___________ Percent a year.

Keynesians believe that

ʺThe long-run Phillips curve is vertical at the expected inflation rate.ʺ Is the previous statement correct or incorrect?

Cost-push inflation might initially result from

A one-time increase in the price of oil followed by a one-time increase in aggregate demand produce

At the start of a cost-push inflation,

When the price level is rising and simultaneously real GDP is decreasing,

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

When there is a cost-push inflation,

-In the above figure, the economy is initially at point A. If workers and firms correctly anticipate the increase in aggregate demand and the resulting inflation rate, the economy will move to point

To stop a demand-pull inflation using monetary policy, you would recommend that the Fed

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?

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

In a demand-pull inflation, the AD curve shifts_ and the SAS curve shifts_ .

-The figure above shows an economyʹs Phillips curves. Currently, the inflation rate is 6 percent a year. The natural unemployment rate is_ percent and the expected inflation rate is_ Percent a year.