Question 1

An increase in the expected inflation rate shifts the

Accepted Answer

A)  short-run Phillips curve downward. 
B)  short-run Phillips curve upward. 
C)  long-run Phillips curve upward. 
D)  long-run Phillips curve downward. 
A)  short-run Phillips curve downward. 
B)  short-run Phillips curve upward. 
C)  long-run Phillips curve upward. 
D)  long-run Phillips curve downward.

Question 2

-In the above figure, which path represents a demand-pull inflation?

Accepted Answer

A)  point A to C to D to F to G 
B)  point A to B to D to E to G 
C)  point A to C to D to E to G 
D)  point A to B to D to F to G 
A)  point A to C to D to F to G 
B)  point A to B to D to E to G 
C)  point A to C to D to E to G 
D)  point A to B to D to F to G

Question 3

A rise in the price level because of an increase in the price of oil

Accepted Answer

A)  definitely triggers a cost-push inflation. 
B)  definitely triggers a demand-pull inflation. 
C)  might trigger a cost-push inflation. 
D)  might trigger a demand-pull inflation. 
A)  definitely triggers a cost-push inflation. 
B)  definitely triggers a demand-pull inflation. 
C)  might trigger a cost-push inflation. 
D)  might trigger a demand-pull inflation.

Question 4

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

Accepted Answer

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

Question 5

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

Accepted Answer

The impulse in the real busine

Question 6

Stagflation is the combination of a ________ and ________.

Accepted Answer

A)  falling inflation rate; an increasing real GDP 
B)  falling price level; an increasing real GDP 
C)  rising price level; a decreasing real GDP 
D)  rising inflation rate; a decreasing real GDP 
A)  falling inflation rate; an increasing real GDP 
B)  falling price level; an increasing real GDP 
C)  rising price level; a decreasing real GDP 
D)  rising inflation rate; a decreasing real GDP

Question 7

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

Accepted Answer

Cost push inflation starts with a decrea

Question 8

An increase in the expected inflation rate shifts

Accepted Answer

A)  both the short-run and the long-run Phillips curves upward. 
B)  the short-run but not the long-run Phillips curve upward. 
C)  the long-run but not the short-run Phillips curve upward. 
D)  neither the short-run nor the long-run Phillips curve. 
A)  both the short-run and the long-run Phillips curves upward. 
B)  the short-run but not the long-run Phillips curve upward. 
C)  the long-run but not the short-run Phillips curve upward. 
D)  neither the short-run nor the long-run Phillips curve.

Question 9

In a real business cycle model, labor supply

Accepted Answer

A)  increases if the nominal interest rate rises. 
B)  is independent of the real interest rate. 
C)  decreases if the real interest rate rises. 
D)  decreases if the real interest rate falls. 
A)  increases if the nominal interest rate rises. 
B)  is independent of the real interest rate. 
C)  decreases if the real interest rate rises. 
D)  decreases if the real interest rate falls.

Question 10

Demand-pull inflation persists because of

Accepted Answer

A)  continuing increases in government expenditures. 
B)  continuing increases in the quantity of money. 
C)  continuing increases in real wage rates. 
D)  continuing increases in aggregate supply. 
A)  continuing increases in government expenditures. 
B)  continuing increases in the quantity of money. 
C)  continuing increases in real wage rates. 
D)  continuing increases in aggregate supply.

Question 11

A rational expectation is

Accepted Answer

A)  a correct forecast but it might not be the best available forecast. 
B)  always an incorrect forecast. 
C)  not necessarily correct but is the best available forecast. 
D)  necessarily correct because it is the best available forecast. 
A)  a correct forecast but it might not be the best available forecast. 
B)  always an incorrect forecast. 
C)  not necessarily correct but is the best available forecast. 
D)  necessarily correct because it is the best available forecast.

Question 12

Keynesians believe that

Accepted Answer

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

Question 13

Suppose that last year the economy of Suffera was experiencing an expected inflation rate of 8 percent and unemployment rate of 12 percent. An unexpected increase in the inflation rate would

Accepted Answer

A)  increase the unemployment rate. 
B)  increase the inflation rate and decrease the unemployment rate. 
C)  increase the inflation rate but have no effect on the unemployment rate. 
D)  None of the above answers is correct. 
A)  increase the unemployment rate. 
B)  increase the inflation rate and decrease the unemployment rate. 
C)  increase the inflation rate but have no effect on the unemployment rate. 
D)  None of the above answers is correct.

Question 14

Based on the Keynesian theory of the business cycle, if the economy is at its full-employment equilibrium and aggregate demand increases then

Accepted Answer

A)  the price level and real GDP both increase. 
B)  the price level rises but real GDP remains unchanged. 
C)  the price level and real GDP both decrease. 
D)  real GDP decreases and the price level remains unchanged. 
A)  the price level and real GDP both increase. 
B)  the price level rises but real GDP remains unchanged. 
C)  the price level and real GDP both decrease. 
D)  real GDP decreases and the price level remains unchanged.

Question 15

Demand-pull inflation occurs when

Accepted Answer

A)  aggregate demand increases persistently. 
B)  aggregate supply and aggregate demand decrease persistently. 
C)  the government increases its expenditures. 
D)  oil prices increase substantially. 
A)  aggregate demand increases persistently. 
B)  aggregate supply and aggregate demand decrease persistently. 
C)  the government increases its expenditures. 
D)  oil prices increase substantially.

Question 16

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

Accepted Answer

A)  B. 
B)  C. 
C)  D. 
D)  E. 
A)  B. 
B)  C. 
C)  D. 
D)  E.

Question 17

If the Fed responds to an initial increase in aggregate demand by increasing the quantity of money

Accepted Answer

A)  there will be no inflationary gap. 
B)  real GDP will begin to decrease more rapidly than if the quantity of money had remained constant. 
C)  money wages will fall to reduce unemployment. 
D)  there is the risk of continued inflation. 
A)  there will be no inflationary gap. 
B)  real GDP will begin to decrease more rapidly than if the quantity of money had remained constant. 
C)  money wages will fall to reduce unemployment. 
D)  there is the risk of continued inflation.

Question 18

-An economy is at potential GDP and the price level is 100 in the figure above. If aggregate demand unexpectedly increases so that the aggregate demand curve shifts to AD1, in the short run the inflation rate is

Accepted Answer

A)  0 percent a year. 
B)  10 percent a year. 
C)  20 percent a year. 
D)  More than 20 percent a year. 
A)  0 percent a year. 
B)  10 percent a year. 
C)  20 percent a year. 
D)  More than 20 percent a year.

Question 19

-In the above figure, what might have shifted the short-run Phillips curve from SRPC1 to SRPC2 while leaving the long-run Phillips curve unchanged at LRPC?

Accepted Answer

A)  The natural unemployment rate increased. 
B)  The natural unemployment rate decreased. 
C)  The expected inflation rate increased. 
D)  The expected inflation rate decreased. 
A)  The natural unemployment rate increased. 
B)  The natural unemployment rate decreased. 
C)  The expected inflation rate increased. 
D)  The expected inflation rate decreased.

Question 20

A Phillips curve measures the relationship between

Accepted Answer

A)  the unemployment rate and inflation. 
B)  the level of money wage rates and GDP. 
C)  unemployment and GDP. 
D)  inflation and GDP. 
A)  the unemployment rate and inflation. 
B)  the level of money wage rates and GDP. 
C)  unemployment and GDP. 
D)  inflation and GDP.

An increase in the expected inflation rate shifts the

-In the above figure, which path represents a demand-pull inflation?

A rise in the price level because of an increase in the price of oil

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

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

Stagflation is the combination of a and .

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

An increase in the expected inflation rate shifts

In a real business cycle model, labor supply

Demand-pull inflation persists because of

A rational expectation is

Keynesians believe that

Suppose that last year the economy of Suffera was experiencing an expected inflation rate of 8 percent and unemployment rate of 12 percent. An unexpected increase in the inflation rate would

Based on the Keynesian theory of the business cycle, if the economy is at its full-employment equilibrium and aggregate demand increases then

Demand-pull inflation occurs when

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

If the Fed responds to an initial increase in aggregate demand by increasing the quantity of money

-An economy is at potential GDP and the price level is 100 in the figure above. If aggregate demand unexpectedly increases so that the aggregate demand curve shifts to AD₁, in the short run the inflation rate is

-In the above figure, what might have shifted the short-run Phillips curve from SRPC₁ to SRPC₂ while leaving the long-run Phillips curve unchanged at LRPC?

A Phillips curve measures the relationship between

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

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 12: The Business Cycle, Inflation, and Deflation

An increase in the expected inflation rate shifts the

-In the above figure, which path represents a demand-pull inflation?

A rise in the price level because of an increase in the price of oil

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

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

Stagflation is the combination of a ________ and ________.

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

An increase in the expected inflation rate shifts

In a real business cycle model, labor supply

Demand-pull inflation persists because of

A rational expectation is

Keynesians believe that

Suppose that last year the economy of Suffera was experiencing an expected inflation rate of 8 percent and unemployment rate of 12 percent. An unexpected increase in the inflation rate would

Based on the Keynesian theory of the business cycle, if the economy is at its full-employment equilibrium and aggregate demand increases then

Demand-pull inflation occurs when

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

If the Fed responds to an initial increase in aggregate demand by increasing the quantity of money

-An economy is at potential GDP and the price level is 100 in the figure above. If aggregate demand unexpectedly increases so that the aggregate demand curve shifts to AD1, in the short run the inflation rate is

-In the above figure, what might have shifted the short-run Phillips curve from SRPC1 to SRPC2 while leaving the long-run Phillips curve unchanged at LRPC?

A Phillips curve measures the relationship between

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

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Stagflation is the combination of a and .

-An economy is at potential GDP and the price level is 100 in the figure above. If aggregate demand unexpectedly increases so that the aggregate demand curve shifts to AD₁, in the short run the inflation rate is

-In the above figure, what might have shifted the short-run Phillips curve from SRPC₁ to SRPC₂ while leaving the long-run Phillips curve unchanged at LRPC?