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

Inflation can be started by

According to the new classical theory,__________ policy changes have no effect on real GDP and according to the new Keynesian theory,__________ policy changes have an effect on real GDP.

In the Keynesian business cycle theory, business cycles begin with changes in

The new Keynesian cycle theory views only anticipated changes in aggregate demand as the source of business cycle economic fluctuations.

If the unemployment rate initially equals its natural rate, then if the inflation rate rises above its expected rate, the unemployment rate___________ .

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

For an economy at full employment, an increase in the quantity of money will lead to which of the following sequences of shifts in aggregate demand and supply curves?

ʺAll for One, but None for Allʺ In an article regarding how Great Britain and France are addressing the economic crisis in 2008, Britainʹs prime minister ʺis eager to encourage consumer spendingʺ while Franceʹs president ʺwants to boost investment in both the private and public sectors.ʺ Both leaders are concerned because ʺhardly a day goes by without some manufacturing company announcing painful restructuring, plant closures or temporary lay-offs.ʺ If the governments can increase consumption or investment while holding the expected inflation constant, there would be

Stagflation occurs when the SAS curve shifts leftward.

The real business cycle theory views fluctuations in productivity as the main source of business cycles.

Using the monetarist model, place the following events in the order in which they occur in a business cycle. I. Money wages fall and the SAS curve shifts rightward. II. The Federal Reserve decreases the growth rate of the quantity of money. III. The AD curve shifts leftward.

To prevent demand-pull inflation

-In the above figure, suppose the economy is at point A. An expected increase in the inflation rate to 6 percent will result in a movement to point

Suppose the expected inflation rate is 8 percent and the unemployment rate is 3 percent. If the inflation rate rises to 10 percent and the expected inflation rate does not change,

-Which of the above figures best shows the start of a demand-pull inflation?

-In the above figure, the economy initially is at point A and then an increase in the quantity of money moves the economy to point D. At point D, the real wage rate has

-The figure above shows an economyʹs Phillips curves. Currently, the inflation rate is 6 percent a year. If inflation expectations remain unchanged, the current unemployment rate is___________ .

-In the above figure, suppose that the economy currently is at point A. If the inflation rate rises and this rise is anticipated by the public, the economy moves to a point such as point

By itself, a fall in the price of oil shifts the

What is the factor that leads to business cycles in the monetarist cycle theory?