Question 1

According to the real business cycle theory,technological change

Accepted Answer

A)  occurs at a constant rate. 
B)  happens only occasionally. 
C)  happens at an uneven pace. 
D)  is increasing in recent years at an increasing rate. 
A)  occurs at a constant rate. 
B)  happens only occasionally. 
C)  happens at an uneven pace. 
D)  is increasing in recent years at an increasing rate.

Question 2

-In the above,which figure shows the start of a cost-push inflation?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D

Question 3

A one-time rise in the price level can turn into a demand-pull inflation when ________.

Accepted Answer

A)  the money wage rate continues to increase 
B)  the quantity of money persistently decreases 
C)  taxes consistently increase 
D)  the quantity of money persistently increases 
A)  the money wage rate continues to increase 
B)  the quantity of money persistently decreases 
C)  taxes consistently increase 
D)  the quantity of money persistently increases

Question 4

Which of the following can start an inflation?

Accepted Answer

A)  an increase in aggregate demand 
B)  an increase in aggregate supply 
C)  a decrease in aggregate supply 
D)  Both answers A and C are correct. 
A)  an increase in aggregate demand 
B)  an increase in aggregate supply 
C)  a decrease in aggregate supply 
D)  Both answers A and C are correct.

Question 5

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 6

The economy is at potential GDP when people correctly anticipate an increase in government expenditure on goods and services.If the money wage rate adjusts immediately,then

Accepted Answer

A)  real GDP and the price level will increase in the short run, but the real wage rate will fall. 
B)  real GDP remains at potential GDP. 
C)  real GDP, the price level, and the real wage rate all increase in the short run. 
D)  real GDP remains at potential GDP, there is no change in the price level, and the real wage rate rises in the short run. 
A)  real GDP and the price level will increase in the short run, but the real wage rate will fall. 
B)  real GDP remains at potential GDP. 
C)  real GDP, the price level, and the real wage rate all increase in the short run. 
D)  real GDP remains at potential GDP, there is no change in the price level, and the real wage rate rises in the short run.

Question 7

In the real business cycle framework,a technology shock that increases investment demand and the demand for loanable funds leads to a ________ quantity of saving and a ________ real interest rate.

Accepted Answer

A)  higher; higher 
B)  higher; lower 
C)  lower; higher 
D)  lower; lower 
A)  higher; higher 
B)  higher; lower 
C)  lower; higher 
D)  lower; lower

Question 8

-The figure above shows the aggregate demand,short-run aggregate supply,and long-run aggregate supply curves for the U.S.economy.The economy is currently at point A.A demand-pull rise in the price level will initially move the economy to point ________ and to point ________.

Accepted Answer

A)  E when aggregate demand increases; D when the wage rate rises 
B)  B when aggregate demand decreases; C when the wage rate rises 
C)  E; A when aggregate demand changes 
D)  C when the wage rate rises; D when aggregate demand increases 
A)  E when aggregate demand increases; D when the wage rate rises 
B)  B when aggregate demand decreases; C when the wage rate rises 
C)  E; A when aggregate demand changes 
D)  C when the wage rate rises; D when aggregate demand increases

Question 9

The business cycle impulse in the new classical theory of the business cycle is

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. 
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.

Question 10

A Phillips curve shows the relationship between the

Accepted Answer

A)  price level and real GDP. 
B)  unemployment rate and real GDP. 
C)  inflation rate and the unemployment rate. 
D)  inflation rate and real GDP. 
A)  price level and real GDP. 
B)  unemployment rate and real GDP. 
C)  inflation rate and the unemployment rate. 
D)  inflation rate and real GDP.

Question 11

Demand pull inflation can be started by

Accepted Answer

A)  a decrease in the quantity of money. 
B)  an increase in government expenditure. 
C)  a decrease in net exports. 
D)  an increase in the price of oil 
A)  a decrease in the quantity of money. 
B)  an increase in government expenditure. 
C)  a decrease in net exports. 
D)  an increase in the price of oil

Question 12

The term "stagflation" refers to the situation when

Accepted Answer

A)  the aggregate supply curve shifts leftward, prices increase and real GDP decreases. 
B)  real GDP and the price level both rise because of an increase in aggregate demand. 
C)  prices become stagnant and do not increase or decrease. 
D)  the short-run aggregate supply curve and the aggregate demand curve shift in opposite directions. 
A)  the aggregate supply curve shifts leftward, prices increase and real GDP decreases. 
B)  real GDP and the price level both rise because of an increase in aggregate demand. 
C)  prices become stagnant and do not increase or decrease. 
D)  the short-run aggregate supply curve and the aggregate demand curve shift in opposite directions.

Question 13

The long-run Phillips curve is vertical at the natural unemployment rate.

Accepted Answer

A) True 
 B)False

Question 14

Suppose that a shock causes the aggregate demand curve to shift rightward.If the Fed does nothing,

Accepted Answer

A)  the economy will experience a temporary reduction in employment but will eventually return to full employment. 
B)  output initially will exceed potential GDP, but the economy will return to potential GDP with a higher price level. 
C)  the short-run aggregate supply curve will not shift leftward and there will be continued inflation. 
D)  eventually the short-run aggregate supply curve will shift leftward and there will be continued inflation. 
A)  the economy will experience a temporary reduction in employment but will eventually return to full employment. 
B)  output initially will exceed potential GDP, but the economy will return to potential GDP with a higher price level. 
C)  the short-run aggregate supply curve will not shift leftward and there will be continued inflation. 
D)  eventually the short-run aggregate supply curve will shift leftward and there will be continued inflation.

Question 15

What is the factor that leads to business cycles in the Keynesian cycle theory?

Accepted Answer

The impulse in the Keynesian t

Question 16

In the short-run,an increase in the price of raw materials will ________ the price level and ________ real GDP.

Accepted Answer

A)  raise; increase 
B)  raise; decrease 
C)  lower; increase 
D)  lower; decrease 
A)  raise; increase 
B)  raise; decrease 
C)  lower; increase 
D)  lower; decrease

Question 17

-In the above figure,suppose the economy is at point A initially.For real GDP to increase to and consistently remain above $13 trillion, I. the price level must increase to above 90.
II) there must be continued increases in the quantity of money.

Accepted Answer

A)  only I 
B)  only II 
C)  Both I and II are correct. 
D)  Neither I nor II is correct. 
A)  only I 
B)  only II 
C)  Both I and II are correct. 
D)  Neither I nor II is correct.

Question 18

According to real business cycle (RBC) theory,a change in the quantity of money leads to

Accepted Answer

A)  a change in the price level and in real GDP. 
B)  a change in the price level but no change in real GDP. 
C)  a change in investment and real GDP. 
D)  a change in the real wage rate and the money wage rate. 
A)  a change in the price level and in real GDP. 
B)  a change in the price level but no change in real GDP. 
C)  a change in investment and real GDP. 
D)  a change in the real wage rate and the money wage rate.

Question 19

Which theory views fluctuations in productivity as the main source of business cycle fluctuations?

Accepted Answer

A)  real business cycle theory 
B)  Keynesian cycle theory 
C)  monetarist cycle theory 
D)  new classical cycle theory 
A)  real business cycle theory 
B)  Keynesian cycle theory 
C)  monetarist cycle theory 
D)  new classical cycle theory

Question 20

The Cleveland Federal Reserve Bank's estimate of expected inflation in 2013 is 1.5 percent.In 2013,if aggregate demand grows faster than expected,the actual inflation rate will

Accepted Answer

A)  exceed 1.5 percent. 
B)  equal 1.5 percent because the actual inflation rate must equal the expected inflation rate. 
C)  be less than 1.5 percent. 
D)  None of the above answers are correct because there is no relationship between the actual inflation rate and aggregate demand. 
A)  exceed 1.5 percent. 
B)  equal 1.5 percent because the actual inflation rate must equal the expected inflation rate. 
C)  be less than 1.5 percent. 
D)  None of the above answers are correct because there is no relationship between the actual inflation rate and aggregate demand.

According to the real business cycle theory,technological change

-In the above,which figure shows the start of a cost-push inflation?

A one-time rise in the price level can turn into a demand-pull inflation when ________.

Which of the following can start an inflation?

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

The economy is at potential GDP when people correctly anticipate an increase in government expenditure on goods and services.If the money wage rate adjusts immediately,then

In the real business cycle framework,a technology shock that increases investment demand and the demand for loanable funds leads to a quantity of saving and a real interest rate.

-The figure above shows the aggregate demand,short-run aggregate supply,and long-run aggregate supply curves for the U.S.economy.The economy is currently at point A.A demand-pull rise in the price level will initially move the economy to point and to point .

The business cycle impulse in the new classical theory of the business cycle is

A Phillips curve shows the relationship between the

Demand pull inflation can be started by

The term "stagflation" refers to the situation when

The long-run Phillips curve is vertical at the natural unemployment rate.

Suppose that a shock causes the aggregate demand curve to shift rightward.If the Fed does nothing,

What is the factor that leads to business cycles in the Keynesian cycle theory?

In the short-run,an increase in the price of raw materials will the price level and real GDP.

-In the above figure,suppose the economy is at point A initially.For real GDP to increase to and consistently remain above $13 trillion, I. the price level must increase to above 90. II) there must be continued increases in the quantity of money.

According to real business cycle (RBC) theory,a change in the quantity of money leads to

Which theory views fluctuations in productivity as the main source of business cycle fluctuations?

The Cleveland Federal Reserve Bank's estimate of expected inflation in 2013 is 1.5 percent.In 2013,if aggregate demand grows faster than expected,the actual inflation rate will

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

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

Exam 12: Inflation, Jobs, and the Business Cycle

According to the real business cycle theory,technological change

-In the above,which figure shows the start of a cost-push inflation?

A one-time rise in the price level can turn into a demand-pull inflation when ________.

Which of the following can start an inflation?

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

The economy is at potential GDP when people correctly anticipate an increase in government expenditure on goods and services.If the money wage rate adjusts immediately,then

In the real business cycle framework,a technology shock that increases investment demand and the demand for loanable funds leads to a ________ quantity of saving and a ________ real interest rate.

-The figure above shows the aggregate demand,short-run aggregate supply,and long-run aggregate supply curves for the U.S.economy.The economy is currently at point A.A demand-pull rise in the price level will initially move the economy to point ________ and to point ________.

The business cycle impulse in the new classical theory of the business cycle is

A Phillips curve shows the relationship between the

Demand pull inflation can be started by

The term "stagflation" refers to the situation when

The long-run Phillips curve is vertical at the natural unemployment rate.

Suppose that a shock causes the aggregate demand curve to shift rightward.If the Fed does nothing,

What is the factor that leads to business cycles in the Keynesian cycle theory?

In the short-run,an increase in the price of raw materials will ________ the price level and ________ real GDP.

-In the above figure,suppose the economy is at point A initially.For real GDP to increase to and consistently remain above $13 trillion, I. the price level must increase to above 90. II) there must be continued increases in the quantity of money.

According to real business cycle (RBC) theory,a change in the quantity of money leads to

Which theory views fluctuations in productivity as the main source of business cycle fluctuations?

The Cleveland Federal Reserve Bank's estimate of expected inflation in 2013 is 1.5 percent.In 2013,if aggregate demand grows faster than expected,the actual inflation rate will

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

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

In the real business cycle framework,a technology shock that increases investment demand and the demand for loanable funds leads to a quantity of saving and a real interest rate.

-The figure above shows the aggregate demand,short-run aggregate supply,and long-run aggregate supply curves for the U.S.economy.The economy is currently at point A.A demand-pull rise in the price level will initially move the economy to point and to point .

In the short-run,an increase in the price of raw materials will the price level and real GDP.