Exam 28: The Business Cycle, Inflation, and Deflation

The Canadian long-run Phillips curve ________ when the expected inflation rate rises and ________ when the expected inflation rate falls. The Canadian long-run Phillips curve ________ when the natural unemployment rate increases and ________ when the natural unemployment rate decreases.

Choose the statement that is incorrect.

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

Use the figure below to answer the following questions. Figure 28.4.1 -Refer to Figure 28.4.1. The figure illustrates an economy's Phillips curves. What is the expected inflation rate?

Use the figure below to answer the following questions. Figure 28.2.3 -Refer to Figure 28.2.3. Assume that the figure illustrates an economy initially in equilibrium at the intersection of the SAS₀ curve and the AD₀ curve. If the aggregate demand curve is correctly expected to shift to AD₁, new equilibrium real GDP is ________ and the new equilibrium price level is ________.

According to real business cycle theory, a fall in the real interest rate ________ the supply of labour and ________ employment.

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?

Suppose that in response to a decrease in real interest rates, a person decides to reduce his supply of labour today and increase it in the future. This behaviour is most consistent with the

Use the figure below to answer the following questions. Figure 28.2.2 -Refer to Figure 28.2.2. Consider the market for labour as the short-run aggregate supply curve shifts leftward from SAS₀ to SAS₁. This shift could have been the result of an agreement between workers and employers for a

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

Inflation that starts because aggregate demand increases is called

Use the figure below to answer the following questions. Figure 28.2.3 -Refer to Figure 28.2.3. Assume that the figure illustrates an economy initially in equilibrium at the intersection of the SAS₀ curve and the AD₀ curve. If the aggregate demand curve is expected to shift to AD₁ but remains at AD₀, the new equilibrium real GDP is ________ and the new equilibrium price level is ________.

Suppose aggregate demand increases by more than expected. Which of the following does not occur?

Which one of the following can start a demand-pull inflation?

Use the figure below to answer the following questions. Figure 28.4.1 -Refer to Figure 28.4.1. The figure illustrates an economy's Phillips curves. What is the natural unemployment rate?

An increase in the expected rate of inflation shifts the

In real business cycle theory, ________ are the main source of economic fluctuations.

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 rises to 12 percent, what is the unemployment rate?

Use the information below to answer the following questions. Fact 28.4.1 Eurozone Unemployment Hits Record High As Inflation Rises Unexpectedly Eurozone unemployment rose to 10.7 percent. At the same time, Eurozone inflation unexpectedly rose to 2.7 percent a year, up from the previous month's 2.6 percent a year. Source: Huffington Post, March 1, 2012 -Consider Fact 28.4.1. Choose the statement that is incorrect about the Eurozone economy.

According to real business cycle theory, workers' decisions to work now versus later depend on