Question 1

The key ripple effect in real business cycle theory is the_________ decision and it depends on the_________

Accepted Answer

A)  what-to-save; nominal interest rate 
B)  where-to-work; real wage rate 
C)  when-to-invest; real interest rate 
D)  when-to-work; real interest rate 
A)  what-to-save; nominal interest rate 
B)  where-to-work; real wage rate 
C)  when-to-invest; real interest rate 
D)  when-to-work; real interest rate

Question 2

What factors can start a cost-push inflation? What must the Fedʹs response be for the inflation to continue?

Accepted Answer

Cost push inflation starts with a decrea

Question 3

In a story from www.Forbes.com 5/30/2003)  , it was reported that the Chief Technology Officer of the U.S. plans for the country to spend $58.1 billion on technology that year. He was planning to buy technology from Cisco Systems, Oracle and Sun Microsystems in addition to other software makers.
This story reports on technological change which is the stressed in the_____________ of business cycles.

Accepted Answer

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

Question 4

The long-run Phillips curve is

Accepted Answer

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

Question 5

As the money wage rate rises,

Accepted Answer

A)  the short-run aggregate supply curve shifts rightward. 
B)  the long-run aggregate supply curve shifts rightward. 
C)  both the long-run aggregate supply curve and the short-run aggregate supply curve shift leftward. 
D)  the short-run aggregate supply curve shifts leftward. 
A)  the short-run aggregate supply curve shifts rightward. 
B)  the long-run aggregate supply curve shifts rightward. 
C)  both the long-run aggregate supply curve and the short-run aggregate supply curve shift leftward. 
D)  the short-run aggregate supply curve shifts leftward.

Question 6

At the start of a cost-push inflation,

Accepted Answer

A)  the price level rises and real GDP decreases. 
B)  the price level and real GDP both increase. 
C)  only real GDP changes while the price level remains constant. 
D)  the price level rises and real GDP does not change. 
A)  the price level rises and real GDP decreases. 
B)  the price level and real GDP both increase. 
C)  only real GDP changes while the price level remains constant. 
D)  the price level rises and real GDP does not change.

Question 7

Inflation describes the event of increasing output and rising prices.)

Accepted Answer

A) True 
 B)False

Question 8

Cost-push inflation can start with

Accepted Answer

A)  a decrease in investment. 
B)  an increase in oil prices. 
C)  a decrease in the quantity of money. 
D)  an increase in government expenditure. 
A)  a decrease in investment. 
B)  an increase in oil prices. 
C)  a decrease in the quantity of money. 
D)  an increase in government expenditure.

Question 9

Using the Phillips curves, what are the short-run and long-run effects of a decrease in the inflation rate?

Accepted Answer

In the short run, there is first a downw

Question 10

A movement along the SAS curve that brings a lower price level and a decrease in real GDP is equivalent to a

Accepted Answer

A)  movement along a short-run Phillips curve that brings an increase in the inflation rate and an increase in the unemployment rate. 
B)  shift in the short-run Phillips curve that brings a decrease in the inflation rate and an increase in the unemployment rate. 
C)  movement along a short-run Phillips curve that brings a decrease in the inflation rate and an increase in the unemployment rate. 
D)  shift in the short-run Phillips curve that brings an increase in the inflation rate and an increase in the unemployment rate. 
A)  movement along a short-run Phillips curve that brings an increase in the inflation rate and an increase in the unemployment rate. 
B)  shift in the short-run Phillips curve that brings a decrease in the inflation rate and an increase in the unemployment rate. 
C)  movement along a short-run Phillips curve that brings a decrease in the inflation rate and an increase in the unemployment rate. 
D)  shift in the short-run Phillips curve that brings an increase in the inflation rate and an increase in the unemployment rate.

Question 11

The long-run Phillips curve shows the relationship between

Accepted Answer

A)  the price level and unemployment in the long run. 
B)  inflation and unemployment when expected inflation does not change. 
C)  inflation and unemployment when expected inflation equals the actual inflation. 
D)  the price level and real GDP in the long run. 
A)  the price level and unemployment in the long run. 
B)  inflation and unemployment when expected inflation does not change. 
C)  inflation and unemployment when expected inflation equals the actual inflation. 
D)  the price level and real GDP in the long run.

Question 12

An increase in the expected inflation rate leads to___________ the short -run Phillips curve.

Accepted Answer

A)  a movement upward along 
B)  an upward shift of 
C)  a movement downward along 
D)  a downward shift of 
A)  a movement upward along 
B)  an upward shift of 
C)  a movement downward along 
D)  a downward shift of

Question 13

One example of cost-push inflation is an increase in

Accepted Answer

A)  the money prices of raw materials followed by decreases in the quantity of money. 
B)  the money prices of raw materials followed by increases in the quantity of money. 
C)  the money prices of raw materials followed by no government policy. 
D)  government expenditure followed by increases in the quantity of money. 
A)  the money prices of raw materials followed by decreases in the quantity of money. 
B)  the money prices of raw materials followed by increases in the quantity of money. 
C)  the money prices of raw materials followed by no government policy. 
D)  government expenditure followed by increases in the quantity of money.

Question 14

Movements upward along the short-run Phillips curve result from

Accepted Answer

A)  expected increases in the inflation rate. 
B)  unexpected decreases in the inflation rate. 
C)  unexpected increases in the inflation rate. 
D)  expected decreases in the inflation rate. 
A)  expected increases in the inflation rate. 
B)  unexpected decreases in the inflation rate. 
C)  unexpected increases in the inflation rate. 
D)  expected decreases in the inflation rate.

Question 15

A change in the natural unemployment rate___________ .

Accepted Answer

A)  causes a movement along the short-run Phillips curve 
B)  shifts both the short-run and long-run Phillips curves 
C)  shifts only the short-run Phillips curve 
D)  shifts only the long-run Phillips curve 
A)  causes a movement along the short-run Phillips curve 
B)  shifts both the short-run and long-run Phillips curves 
C)  shifts only the short-run Phillips curve 
D)  shifts only the long-run Phillips curve

Question 16

-In the above figure, suppose the economy is at point A initially. For real GDP to increase to and
Consistently remain above $13 trillion,
I. the price level must increase to above 90.
II. there must be continued increases in the quantity of money.

Accepted Answer

A)  only I 
B)  Both I and II are correct. 
C)  only II 
D)  Neither I nor II is correct. 
A)  only I 
B)  Both I and II are correct. 
C)  only II 
D)  Neither I nor II is correct.

Question 17

By itself, a supply shock such as a hike in the price of oil, can

Accepted Answer

A)  cause a wage-price spiral. 
B)  not cause inflation. 
C)  be inflationary as long as there is no policy response. 
D)  cause real GDP to permanently decrease year after year. 
A)  cause a wage-price spiral. 
B)  not cause inflation. 
C)  be inflationary as long as there is no policy response. 
D)  cause real GDP to permanently decrease year after year.

Question 18

Over the last several years, the money supply in Indonesia as increased by 9 percent in 2003 to 14 percent in 2005 and 23 percent in 2007. At the same time, real GDP has grown steadily at over 4 percent annually.
These changes would be shown as
i. rightward shifts of the AD curve
ii. a movement down along the short-run Phillips curve
iii. rightward shifts of the LAS curve

Accepted Answer

A)  i and iii. 
B)  ii only. 
C)  i only. 
D)  i, ii and iii. 
A)  i and iii. 
B)  ii only. 
C)  i only. 
D)  i, ii and iii.

Question 19

Which of the following is a criticism of real business cycle theory?

Accepted Answer

A)  Real business cycle theory assumes that money wage rates are sticky. 
B)  Real business cycle theory fails to explain the phenomenon of economic growth. 
C)  Real business cycle theory believes that productivity changes are caused by technology changes when in fact they are caused by changes in aggregate demand. 
D)  None of the above are criticisms of real business cycle theory. 
A)  Real business cycle theory assumes that money wage rates are sticky. 
B)  Real business cycle theory fails to explain the phenomenon of economic growth. 
C)  Real business cycle theory believes that productivity changes are caused by technology changes when in fact they are caused by changes in aggregate demand. 
D)  None of the above are criticisms of real business cycle theory.

Question 20

What is the impulse that leads to business cycle in the real business cycle, RBC, theory?

Accepted Answer

The real business cycle theory focuses o

The key ripple effect in real business cycle theory is the_ decision and it depends on the_

What factors can start a cost-push inflation? What must the Fedʹs response be for the inflation to continue?

The long-run Phillips curve is

As the money wage rate rises,

At the start of a cost-push inflation,

Inflation describes the event of increasing output and rising prices.)

Cost-push inflation can start with

Using the Phillips curves, what are the short-run and long-run effects of a decrease in the inflation rate?

A movement along the SAS curve that brings a lower price level and a decrease in real GDP is equivalent to a

The long-run Phillips curve shows the relationship between

An increase in the expected inflation rate leads to___________ the short -run Phillips curve.

One example of cost-push inflation is an increase in

Movements upward along the short-run Phillips curve result from

A change in the natural unemployment rate___________ .

-In the above figure, suppose the economy is at point A initially. For real GDP to increase to and Consistently remain above $13 trillion, I. the price level must increase to above 90. II. there must be continued increases in the quantity of money.

By itself, a supply shock such as a hike in the price of oil, can

Which of the following is a criticism of real business cycle theory?

What is the impulse that leads to business cycle in the real business cycle, RBC, theory?

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

The key ripple effect in real business cycle theory is the_________ decision and it depends on the_________

What factors can start a cost-push inflation? What must the Fedʹs response be for the inflation to continue?

The long-run Phillips curve is

As the money wage rate rises,

At the start of a cost-push inflation,

Inflation describes the event of increasing output and rising prices.)

Cost-push inflation can start with

Using the Phillips curves, what are the short-run and long-run effects of a decrease in the inflation rate?

A movement along the SAS curve that brings a lower price level and a decrease in real GDP is equivalent to a

The long-run Phillips curve shows the relationship between

An increase in the expected inflation rate leads to___________ the short -run Phillips curve.

One example of cost-push inflation is an increase in

Movements upward along the short-run Phillips curve result from

A change in the natural unemployment rate___________ .

-In the above figure, suppose the economy is at point A initially. For real GDP to increase to and Consistently remain above $13 trillion, I. the price level must increase to above 90. II. there must be continued increases in the quantity of money.

By itself, a supply shock such as a hike in the price of oil, can

Which of the following is a criticism of real business cycle theory?

What is the impulse that leads to business cycle in the real business cycle, RBC, theory?

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

The key ripple effect in real business cycle theory is the_ decision and it depends on the_