Question 1

According to ________ theory,a decrease in productivity growth shifts the ________.

Accepted Answer

A) real business cycle;AD curve rightward 
B) Keynesian cycle;SAS curve leftward 
C) real business cycle;demand for loanable funds curve leftward 
D) Keynesian cycle;SAS curve rightward 
E) real business cycle;AD curve leftward 
A) real business cycle;AD curve rightward 
B) Keynesian cycle;SAS curve leftward 
C) real business cycle;demand for loanable funds curve leftward 
D) Keynesian cycle;SAS curve rightward 
E) real business cycle;AD curve leftward

Question 2

In real business cycle theory,a decrease in productivity leads to all of the following events EXCEPT

Accepted Answer

A) a decrease in the demand for labour. 
B) a decrease in the demand for loanable funds. 
C) a rise in the real wage rate. 
D) a fall in the real interest rate. 
E) a decrease in the supply of labour. 
A) a decrease in the demand for labour. 
B) a decrease in the demand for loanable funds. 
C) a rise in the real wage rate. 
D) a fall in the real interest rate. 
E) a decrease in the supply of labour.

Question 3

Use the figure below to answer the following questions.
   
Figure 28.1.2
-Refer to Figure 28.1.2.Complete the following sentence.The figure illustrates

Accepted Answer

A) cost-push inflation. 
B) demand-pull inflation. 
C) a cost-push inflation spiral. 
D) a one time rise in the price level. 
E) A and C are both correct. 
A) cost-push inflation. 
B) demand-pull inflation. 
C) a cost-push inflation spiral. 
D) a one time rise in the price level. 
E) A and C are both correct.

Question 4

In the Keynesian business cycle theory,business cycles begin with a change in

Accepted Answer

A) inflation expectations. 
B) government expenditure. 
C) business confidence. 
D) monetary policy. 
E) the money wage rate. 
A) inflation expectations. 
B) government expenditure. 
C) business confidence. 
D) monetary policy. 
E) the money wage rate.

Question 5

Use the figure below to answer the following questions.
   
Figure 28.1.2
-Refer to Figure 28.1.2.Consider the market for labour as the short-run aggregate supply curve shifts leftward from SAS? to SAS?.This shift could have been the result of an agreement between workers and employers for a

Accepted Answer

A) 10 percent decrease in the money wage rate. 
B) 10 percent increase in the money wage rate. 
C) 15 percent decrease in the money wage rate. 
D) 15 percent increase in the money wage rate. 
E) 10 percent increase in the real wage rate. 
A) 10 percent decrease in the money wage rate. 
B) 10 percent increase in the money wage rate. 
C) 15 percent decrease in the money wage rate. 
D) 15 percent increase in the money wage rate. 
E) 10 percent increase in the real wage rate.

Question 6

If the unemployment rate rises and the inflation rate falls,while the natural unemployment rate and the expected inflation rate remain constant,then we are studying a movement along the

Accepted Answer

A) aggregate demand curve. 
B) long-run aggregate supply curve. 
C) Friedman curve. 
D) short-run Phillips curve. 
E) Phelps-Friedman curve. 
A) aggregate demand curve. 
B) long-run aggregate supply curve. 
C) Friedman curve. 
D) short-run Phillips curve. 
E) Phelps-Friedman curve.

Question 7

Use the figure below to answer the following question.
   
Figure 28.1.6
-Refer to Figure 28.1.6.Starting at point A,the initial effect of a demand-pull inflation is a move to point ________.As a demand-pull inflation spiral proceeds,it follows the path ________.

Accepted Answer

A) E;I 
B) C;E, H, I 
C) C;B, H, G, I 
D) B;E, G, I 
E) none of the above 
A) E;I 
B) C;E, H, I 
C) C;B, H, G, I 
D) B;E, G, I 
E) none of the above

Question 8

New Keynesian economists believe that ________ is influenced by ________.

Accepted Answer

A) yesterday's money wage rate;today's rational expectations of the money wage 
B) today's money wage rate;yesterday's rational expectations of the price level 
C) yesterday's rational expectations of the price level;today's money wage rate 
D) today's money wage rate;today's rational expectations of the price level 
E) today's money wage rate;animal spirits 
A) yesterday's money wage rate;today's rational expectations of the money wage 
B) today's money wage rate;yesterday's rational expectations of the price level 
C) yesterday's rational expectations of the price level;today's money wage rate 
D) today's money wage rate;today's rational expectations of the price level 
E) today's money wage rate;animal spirits

Question 9

Suppose that the money prices of raw materials rise.With no action by the Bank of Canada,
I.the aggregate demand curve shifts rightward and the price level rises.
II.the aggregate demand curve shifts rightward and the aggregate supply curve shifts leftward.
III.the initial outcome is lower employment and a rise in the price level.

Accepted Answer

A) I only 
B) II only 
C) III only 
D) I and II only 
E) I, II, and III 
A) I only 
B) II only 
C) III only 
D) I and II only 
E) I, II, and III

Question 10

The short-run Phillips curve shows the relationship between

Accepted Answer

A) the price level and real GDP in the short run. 
B) the price level and unemployment in the short run. 
C) unemployment and real GDP in the short run. 
D) inflation and unemployment, when inflation expectations can change. 
E) inflation and unemployment, when the expected inflation rate and the natural unemployment rate remain constant. 
A) the price level and real GDP in the short run. 
B) the price level and unemployment in the short run. 
C) unemployment and real GDP in the short run. 
D) inflation and unemployment, when inflation expectations can change. 
E) inflation and unemployment, when the expected inflation rate and the natural unemployment rate remain constant.

Question 11

Use the figure below to answer the following questions.
   
Figure 28.2.2
-Refer to Figure 28.2.2.The figure illustrates an economy's Phillips curves.If the current inflation rate is 3 percent,what is the current unemployment rate?

Accepted Answer

A) 9 percent 
B) 6 percent 
C) 4 percent 
D) 3 percent 
E) cannot be determined without more information 
A) 9 percent 
B) 6 percent 
C) 4 percent 
D) 3 percent 
E) cannot be determined without more information

Question 12

The short-run Phillips curve shows the relationship between ________ holding constant the expected inflation rate and the natural unemployment rate.

Accepted Answer

A) the inflation rate and the economic growth rate 
B) unemployment and the economic growth rate 
C) the inflation rate and the unemployment rate 
D) growth and potential GDP. 
E) the inflation rate and the growth of the money wage rate. 
A) the inflation rate and the economic growth rate 
B) unemployment and the economic growth rate 
C) the inflation rate and the unemployment rate 
D) growth and potential GDP. 
E) the inflation rate and the growth of the money wage rate.

Question 13

Use the figure below to answer the following questions.
   
Figure 28.3.1
-Refer to Figure 28.3.1.Suppose the economy moves from point A to point C.According to the monetarist theory of the business cycle,what could have caused this movement?

Accepted Answer

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

Question 14

Use the figure below to answer the following question.
   
Figure 28.1.1
-Refer to Figure 28.1.1.The figure illustrates an economy initially in equilibrium at the intersection of the SAS? curve and the AD? curve.Which of the following shifts the short-run aggregate supply curve from SAS? to SAS??

Accepted Answer

A) an increase in the price of oil 
B) an increase in the price level 
C) an increase in the marginal product of labour 
D) an increase in the demand for money 
E) a decrease in the money wage rate 
A) an increase in the price of oil 
B) an increase in the price level 
C) an increase in the marginal product of labour 
D) an increase in the demand for money 
E) a decrease in the money wage rate

Question 15

Use the table below to answer the following questions.
Table 28.2.1
  
-Refer to Table 28.2.1.The table gives points on the short-run Phillips curve for the country of Ruritania.If the expected inflation rate is 10 percent,and the inflation rate unexpectedly falls to 8 percent,what is the unemployment rate?

Accepted Answer

A) 4 percent 
B) 5 percent 
C) 6 percent 
D) 7 percent 
E) 8 percent 
A) 4 percent 
B) 5 percent 
C) 6 percent 
D) 7 percent 
E) 8 percent

Question 16

According to mainstream business cycle theory,________ grows at a steady rate and ________ grows at a fluctuating rate.

Accepted Answer

A) aggregate demand;long-run aggregate supply 
B) potential GDP;aggregate demand 
C) potential GDP;short-run aggregate supply 
D) short-run aggregate supply;long-run aggregate supply 
E) short-run aggregate supply;aggregate demand 
A) aggregate demand;long-run aggregate supply 
B) potential GDP;aggregate demand 
C) potential GDP;short-run aggregate supply 
D) short-run aggregate supply;long-run aggregate supply 
E) short-run aggregate supply;aggregate demand

Question 17

An economy is in long-run equilibrium when aggregate supply unexpectedly decreases.Then real GDP (ceteris paribus)will be

Accepted Answer

A) above potential GDP. 
B) below potential GDP. 
C) equal to potential GDP. 
D) either above, below, or equal to potential GDP depending on the position of the aggregate demand curve. 
E) either above or equal to potential GDP depending on the position of the aggregate demand curve. 
A) above potential GDP. 
B) below potential GDP. 
C) equal to potential GDP. 
D) either above, below, or equal to potential GDP depending on the position of the aggregate demand curve. 
E) either above or equal to potential GDP depending on the position of the aggregate demand curve.

Question 18

Suppose the economy is in long-run equilibrium when the price of oil rises.Which one of the following is not a short-run effect of this situation?

Accepted Answer

A) an increase in real GDP above long-run real GDP 
B) an increase in the price level 
C) a decrease in real GDP 
D) an increase in unemployment 
E) a decrease in consumer spending 
A) an increase in real GDP above long-run real GDP 
B) an increase in the price level 
C) a decrease in real GDP 
D) an increase in unemployment 
E) a decrease in consumer spending

Question 19

The ________ cycle theory states that only unexpected fluctuations in aggregate demand bring fluctuations in real GDP around potential GDP.

Accepted Answer

A) new Keynesian 
B) new classical 
C) Keynesian 
D) monetarist 
E) real business 
A) new Keynesian 
B) new classical 
C) Keynesian 
D) monetarist 
E) real business

Question 20

An increase in the price level due to an increase in the price of oil

Accepted Answer

A) creates stagflation in the short-run and will trigger a cost-push inflation. 
B) creates stagflation in the short-run and may trigger off a cost-push inflation. 
C) increases output above potential GDP. 
D) leads to an increase in the money wage rate. 
E) leads to a decrease in the money wage rate. 
A) creates stagflation in the short-run and will trigger a cost-push inflation. 
B) creates stagflation in the short-run and may trigger off a cost-push inflation. 
C) increases output above potential GDP. 
D) leads to an increase in the money wage rate. 
E) leads to a decrease in the money wage rate.

Exam 28: Canadian Inflation, Unemployment, and Business Cycle

According to ________ theory,a decrease in productivity growth shifts the ________.

In real business cycle theory,a decrease in productivity leads to all of the following events EXCEPT

Use the figure below to answer the following questions. Figure 28.1.2 -Refer to Figure 28.1.2.Complete the following sentence.The figure illustrates

In the Keynesian business cycle theory,business cycles begin with a change in

Use the figure below to answer the following questions. Figure 28.1.2 -Refer to Figure 28.1.2.Consider the market for labour as the short-run aggregate supply curve shifts leftward from SAS? to SAS?.This shift could have been the result of an agreement between workers and employers for a

If the unemployment rate rises and the inflation rate falls,while the natural unemployment rate and the expected inflation rate remain constant,then we are studying a movement along the

Use the figure below to answer the following question. Figure 28.1.6 -Refer to Figure 28.1.6.Starting at point A,the initial effect of a demand-pull inflation is a move to point ________.As a demand-pull inflation spiral proceeds,it follows the path ________.

New Keynesian economists believe that ________ is influenced by ________.

The short-run Phillips curve shows the relationship between

Use the figure below to answer the following questions. Figure 28.2.2 -Refer to Figure 28.2.2.The figure illustrates an economy's Phillips curves.If the current inflation rate is 3 percent,what is the current unemployment rate?

The short-run Phillips curve shows the relationship between ________ holding constant the expected inflation rate and the natural unemployment rate.

Use the figure below to answer the following questions. Figure 28.3.1 -Refer to Figure 28.3.1.Suppose the economy moves from point A to point C.According to the monetarist theory of the business cycle,what could have caused this movement?

Use the figure below to answer the following question. Figure 28.1.1 -Refer to Figure 28.1.1.The figure illustrates an economy initially in equilibrium at the intersection of the SAS? curve and the AD? curve.Which of the following shifts the short-run aggregate supply curve from SAS? to SAS??

According to mainstream business cycle theory,________ grows at a steady rate and ________ grows at a fluctuating rate.

An economy is in long-run equilibrium when aggregate supply unexpectedly decreases.Then real GDP (ceteris paribus)will be

Suppose the economy is in long-run equilibrium when the price of oil rises.Which one of the following is not a short-run effect of this situation?

The ________ cycle theory states that only unexpected fluctuations in aggregate demand bring fluctuations in real GDP around potential GDP.

An increase in the price level due to an increase in the price of oil

What Is Economics?

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

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

Filters

According to theory,a decrease in productivity growth shifts the .

Use the figure below to answer the following question. Figure 28.1.6 -Refer to Figure 28.1.6.Starting at point A,the initial effect of a demand-pull inflation is a move to point .As a demand-pull inflation spiral proceeds,it follows the path .

New Keynesian economists believe that is influenced by .

According to mainstream business cycle theory, grows at a steady rate and grows at a fluctuating rate.