Question 1

________ states that the main source of economic fluctuations is fluctuations in business confidence.

Accepted Answer

A) Real business cycle theory 
B) New classical cycle theory 
C) Keynesian cycle theory 
D) Monetarist cycle theory 
E) None of the above 
A) Real business cycle theory 
B) New classical cycle theory 
C) Keynesian cycle theory 
D) Monetarist cycle theory 
E) None of the above

Question 2

Cost-push inflation can result from an initial

Accepted Answer

A) decrease in personal income taxes. 
B) increase in personal income taxes. 
C) increase in government expenditure. 
D) increase in the money wage rate. 
E) increase in transfer payments. 
A) decrease in personal income taxes. 
B) increase in personal income taxes. 
C) increase in government expenditure. 
D) increase in the money wage rate. 
E) increase in transfer payments.

Question 3

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 4

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 5

Use the information below to answer the following question.
Fact 28.2.1 High Food and Energy Prices Here to Stay
On top of rising energy prices, a severe drought, bad harvests, and a poor monsoon season in Asia have sent grain prices soaring. Globally, this is the third major food price shock in five years.
Source: The Telegraph, August 29, 2012
-Consider Fact 28.2.1. The news clip is describing ________ inflation.

Accepted Answer

A) cost-push 
B) cost-pull 
C) demand-pull 
D) demand-push 
E) expected 
A) cost-push 
B) cost-pull 
C) demand-pull 
D) demand-push 
E) expected

Question 6

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.

Question 7

The key ripple effect in real business cycle theory is the ________ decision and it depends on the ________.

Accepted Answer

A) when-to-invest; real interest rate 
B) when-to-work; real interest rate 
C) what-to-save; nominal interest rate 
D) where-to-work; real wage rate 
E) when-to-work; rigidity of the money wage rate 
A) when-to-invest; real interest rate 
B) when-to-work; real interest rate 
C) what-to-save; nominal interest rate 
D) where-to-work; real wage rate 
E) when-to-work; rigidity of the money wage rate

Question 8

The economy starts out at a full-employment equilibrium. Some events then occur that generate a demand-pull inflation. All of the following events except an increase in ________ might start a demand-pull inflation.

Accepted Answer

A) the money wage rate 
B) exports 
C) the quantity of money 
D) government expenditure 
E) transfer payments 
A) the money wage rate 
B) exports 
C) the quantity of money 
D) government expenditure 
E) transfer payments

Question 9

According to the real business cycle theory, what effects follow from a change in productivity?
I. Investment demand changes.
II. The demand for labour changes.
III. Government expenditure changes.

Accepted Answer

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

Question 10

In new classical cycle theory, ________ bring fluctuations in real GDP around potential GDP.

Accepted Answer

A) unexpected changes in aggregate demand 
B) expected changes in aggregate demand 
C) fluctuations in money growth with rigid wages 
D) fluctuations in investment coupled with rigid wages 
E) expected changes in labour productivity 
A) unexpected changes in aggregate demand 
B) expected changes in aggregate demand 
C) fluctuations in money growth with rigid wages 
D) fluctuations in investment coupled with rigid wages 
E) expected changes in labour productivity

________ states that the main source of economic fluctuations is fluctuations in business confidence.

Cost-push inflation can result from an initial

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

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

The key ripple effect in real business cycle theory is the decision and it depends on the .

The economy starts out at a full-employment equilibrium. Some events then occur that generate a demand-pull inflation. All of the following events except an increase in ________ might start a demand-pull inflation.

According to the real business cycle theory, what effects follow from a change in productivity? I. Investment demand changes. II. The demand for labour changes. III. Government expenditure changes.

In new classical cycle theory, ________ bring fluctuations in real GDP around potential GDP.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Governments 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

Fiscal Policy

Monetary Policy

Macro Only: International Trade Policy

Filters

Exam 28: The Business Cycle, Inflation, and Deflation

________ states that the main source of economic fluctuations is fluctuations in business confidence.

Cost-push inflation can result from an initial

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

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

The key ripple effect in real business cycle theory is the ________ decision and it depends on the ________.

The economy starts out at a full-employment equilibrium. Some events then occur that generate a demand-pull inflation. All of the following events except an increase in ________ might start a demand-pull inflation.

According to the real business cycle theory, what effects follow from a change in productivity? I. Investment demand changes. II. The demand for labour changes. III. Government expenditure changes.

In new classical cycle theory, ________ bring fluctuations in real GDP around potential GDP.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Governments 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

Fiscal Policy

Monetary Policy

Macro Only: International Trade Policy

Filters

The key ripple effect in real business cycle theory is the decision and it depends on the .