Exam 28: The Business Cycle, Inflation, and Deflation

Real business cycle theorists believe that the intertemporal substitution effect ________. Many other economists believe that the intertemporal substitution effect ________.

A forecast that is based on all the relevant information available is

In real business cycle theory, the supply of labour

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 information below to answer the following questions. Fact 28.4.2 The Reserve Bank of New Zealand signed an agreement with the New Zealand government in which the Bank agreed to maintain inflation inside a low target range. Failure to achieve the target would result in the governor of the Bank losing his job. -Consider Fact 28.4.2. Choose the correct statement.

A movement down along the short-run Phillips curve results from an unanticipated

Use the figure below to answer the following questions. Figure 28.2.2 -Refer to Figure 28.2.2. Complete the following sentence. The figure illustrates

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

Use the table below to answer the following questions. Table 28.4.1 -Refer to Table 28.4.1. 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?

Deflation occurs when

Suppose that the business cycle in Canada is best described by RBC theory. An advance in technology increases productivity. The when-to-work decision depends on the real interest rate. The ________ the real interest rate, other things remaining the same, the ________ is the supply of labour today. RBC theorists believe the when-to-work effect is ________.

Both new Keynesian and new classical cycle theories claim that

If there is a fully anticipated increase in the inflation rate,

According to real business cycle theory, an increase in productivity ________ the demand for loanable funds, ________ the demand for labour, and ________ the supply of labour. The real interest rate will ________.

According to real business cycle theory, if the Bank of Canada increases the quantity of money when real GDP decreases, real GDP

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

Use the figure below to answer the following question. Figure 28.2.1 -Refer to Figure 28.2.1. The figure illustrates an economy initially in equilibrium at the intersection of the SAS₀ curve and the AD₀ curve. Which of the following shifts the short-run aggregate supply curve from SAS₀ to SAS₁?

Use the figure below to answer the following questions. Figure 28.2.2 -Refer to Figure 28.2.2. If the short-run aggregate supply curve does not shift, and remains at SAS₀, then the expected inflation rate is

Demand-pull inflation can start

Which of the following are business cycle theories that regard fluctuations in aggregate demand as the factor that creates business cycles? I. Keynesian cycle theory II. real business cycle theory III. monetarist cycle theory