Question 1

A leftward shift in the aggregate supply curve

Accepted Answer

A)  is the result of the Fed increasing the quantity of money. 
B)  is the result of a rise in the price of a key resource. 
C)  is the result of consumer expenditures exceeding available output. 
D)  increases both the price level and real GDP. 
A)  is the result of the Fed increasing the quantity of money. 
B)  is the result of a rise in the price of a key resource. 
C)  is the result of consumer expenditures exceeding available output. 
D)  increases both the price level and real GDP.

Question 2

Both new Keynesian and new classical cycle theories claim that ________.

Accepted Answer

A)  animal spirits can trigger a business cycle 
B)  shifts in the SAS curve are the main impulse for a business cycle 
C)  unexpected changes in aggregate demand trigger a business cycle 
D)  expected changes in the quantity of money can trigger a business cycle 
A)  animal spirits can trigger a business cycle 
B)  shifts in the SAS curve are the main impulse for a business cycle 
C)  unexpected changes in aggregate demand trigger a business cycle 
D)  expected changes in the quantity of money can trigger a business cycle

Question 3

In a cost-push inflation,

Accepted Answer

A)  increases in AD lead to increases in SAS. 
B)  decreases in AD lead to increases in SAS. 
C)  increases in SAS lead to decreases in AD. 
D)  decreases in SAS lead to increases in AD. 
A)  increases in AD lead to increases in SAS. 
B)  decreases in AD lead to increases in SAS. 
C)  increases in SAS lead to decreases in AD. 
D)  decreases in SAS lead to increases in AD.

Question 4

In a demand-pull inflation,the AD curve shifts ________ and the SAS curve shifts ________.

Accepted Answer

A)  rightward; rightward 
B)  rightward; leftward 
C)  leftward; rightward 
D)  leftward; leftward 
A)  rightward; rightward 
B)  rightward; leftward 
C)  leftward; rightward 
D)  leftward; leftward

Question 5

By itself,an increase in aggregate demand increases GDP by the least amount in the ________.

Accepted Answer

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

Question 6

To prevent cost-push inflation

Accepted Answer

A)  there must not be an excess demand for money. 
B)  interest rates must not rise. 
C)  there must not be an increase in government purchases. 
D)  the Fed must not let the quantity of money rise persistently. 
A)  there must not be an excess demand for money. 
B)  interest rates must not rise. 
C)  there must not be an increase in government purchases. 
D)  the Fed must not let the quantity of money rise persistently.

Question 7

-In the above figure,suppose the economy starts at point A.The short-run response to an increase in the growth rate of the quantity of money in monetarist business cycle theory moves the economy to point

Accepted Answer

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

Question 8

-Which of the above figures best shows the start of a demand-pull 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 9

Demand-pull inflation starts with a shift of the

Accepted Answer

A)  SAS curve rightward. 
B)  AD curve rightward. 
C)  SAS curve leftward. 
D)  AD curve leftward. 
A)  SAS curve rightward. 
B)  AD curve rightward. 
C)  SAS curve leftward. 
D)  AD curve leftward.

Question 10

During a demand-pull inflation,if the Fed tries to maintain a level of real GDP above potential GDP,

Accepted Answer

A)  there will be a one-time shift in the AD and the SAS curves. 
B)  the AD curve will shift rightward continuously and SAS curves will shift leftward continuously. 
C)  the AD curve will shift rightward continuously and the SAS curve will not shift. 
D)  the SAS curve will shift leftward continuously and the AD curve will not shift. 
A)  there will be a one-time shift in the AD and the SAS curves. 
B)  the AD curve will shift rightward continuously and SAS curves will shift leftward continuously. 
C)  the AD curve will shift rightward continuously and the SAS curve will not shift. 
D)  the SAS curve will shift leftward continuously and the AD curve will not shift.

Question 11

The factor leading to business cycles in the Keynesian model is ________.

Accepted Answer

A)  changes in business confidence 
B)  a speed up in money growth 
C)  unanticipated changes in aggregate demand 
D)  unanticipated changes in aggregate supply 
A)  changes in business confidence 
B)  a speed up in money growth 
C)  unanticipated changes in aggregate demand 
D)  unanticipated changes in aggregate supply

Question 12

The key difference between the new classical theory of the business cycle and the new Keynesian theory of the business cycle is that the new classical theory believes that ________ while the new Keynesian theory believes that ________.

Accepted Answer

A)  expected changes in aggregate demand will change real GDP; expected changes in aggregate demand will not change real GDP 
B)  only unexpected changes in aggregate demand will change real GDP; only expected changes in aggregate demand will change real GDP 
C)  only unexpected changes in aggregate demand will change real GDP; both expected and unexpected changes in aggregate demand will change real GDP 
D)  the short-run aggregate supply curve is horizontal; the short-run aggregate supply curve is vertical 
A)  expected changes in aggregate demand will change real GDP; expected changes in aggregate demand will not change real GDP 
B)  only unexpected changes in aggregate demand will change real GDP; only expected changes in aggregate demand will change real GDP 
C)  only unexpected changes in aggregate demand will change real GDP; both expected and unexpected changes in aggregate demand will change real GDP 
D)  the short-run aggregate supply curve is horizontal; the short-run aggregate supply curve is vertical

Question 13

-In the above figure,the movement from point A to B to C to D to E represents

Accepted Answer

A)  demand-pull inflation resulting solely from wage responses to excess labor demand. 
B)  demand-pull inflation resulting from persistent increases in the quantity of money. 
C)  cost-push inflation resulting solely from wage responses to excess labor demand. 
D)  cost-push inflation resulting from persistent increases in the quantity of money. 
A)  demand-pull inflation resulting solely from wage responses to excess labor demand. 
B)  demand-pull inflation resulting from persistent increases in the quantity of money. 
C)  cost-push inflation resulting solely from wage responses to excess labor demand. 
D)  cost-push inflation resulting from persistent increases in the quantity of money.

Question 14

The ________ theory of the business cycle asserts that expected and unexpected changes in aggregate demand lead to fluctuations in real GDP.

Accepted Answer

A)  real business cycle 
B)  new classical cycle 
C)  new Keynesian cycle 
D)  None of the above answers are correct. 
A)  real business cycle 
B)  new classical cycle 
C)  new Keynesian cycle 
D)  None of the above answers are correct.

Question 15

Critics of the real business cycle theory claim that

Accepted Answer

A)  both real and nominal variables change during the business cycle. 
B)  the intertemporal substitution effect is too weak to account for changes in labor supply. 
C)  changes in technology cannot cause economic growth. 
D)  Both answers B and C are correct. 
A)  both real and nominal variables change during the business cycle. 
B)  the intertemporal substitution effect is too weak to account for changes in labor supply. 
C)  changes in technology cannot cause economic growth. 
D)  Both answers B and C are correct.

Question 16

Which of the following is NOT an aggregate demand,mainstream theory of the business cycle?

Accepted Answer

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

Question 17

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

Accepted Answer

A)  An improvement in technology 
B)  A decrease in productivity 
C)  An increase in imports 
D)  None of the above can start a demand-pull inflation. 
A)  An improvement in technology 
B)  A decrease in productivity 
C)  An increase in imports 
D)  None of the above can start a demand-pull inflation.

Question 18

Cost-push inflation can start with

Accepted Answer

A)  lower taxes. 
B)  an increase in government expenditure. 
C)  higher money wage rates. 
D)  an increase in transfer payments. 
A)  lower taxes. 
B)  an increase in government expenditure. 
C)  higher money wage rates. 
D)  an increase in transfer payments.

Question 19

8 Extended Problems
  
-The figure above shows the initial aggregate demand curve,AD₀,the initial short-run aggregate supply curve,SAS₀,and the long-run aggregate supply curve,LAS.The points in the figure show possible combinations of real GDP and the price level at which the economy of Atlantia is in macroeconomic equilibrium.The economy is initially at point A.Then,Atlantia's oil producers form a price-fixing organization and increase the price of oil.Suppose that potential GDP does not change and that Atlantia's Central Bank takes no action.Draw the new aggregate demand and short-run aggregate supply curves in the figure to show the effects of this event on Atlantia's real GDP and price level.
a) What happens to aggregate supply and aggregate demand?
b) What are the new equilibrium real GDP and price level?
c) Will the rise in the price of oil lead to inflation in Atlantia?
Why or why not?

Accepted Answer

@#IMG-DLM& 
a)See the figure above.The increase in

Question 20

When the AD and SAS curves intersect at a level of real GDP which exceeds potential GDP and there is no government policy undertaken,which of the following will occur?

Accepted Answer

A)  The AD curve shifts rightward because the Fed decreases the money supply. 
B)  The SAS curve shifts leftward because the money wage rate rises. 
C)  The AS curve shifts leftward because the money wage rate falls. 
D)  The AD curve shifts leftward because the money wage rate rises. 
A)  The AD curve shifts rightward because the Fed decreases the money supply. 
B)  The SAS curve shifts leftward because the money wage rate rises. 
C)  The AS curve shifts leftward because the money wage rate falls. 
D)  The AD curve shifts leftward because the money wage rate rises.

A leftward shift in the aggregate supply curve

Both new Keynesian and new classical cycle theories claim that ________.

In a cost-push inflation,

In a demand-pull inflation,the AD curve shifts and the SAS curve shifts .

By itself,an increase in aggregate demand increases GDP by the least amount in the ________.

To prevent cost-push inflation

-In the above figure,suppose the economy starts at point A.The short-run response to an increase in the growth rate of the quantity of money in monetarist business cycle theory moves the economy to point

-Which of the above figures best shows the start of a demand-pull inflation?

Demand-pull inflation starts with a shift of the

During a demand-pull inflation,if the Fed tries to maintain a level of real GDP above potential GDP,

The factor leading to business cycles in the Keynesian model is ________.

The key difference between the new classical theory of the business cycle and the new Keynesian theory of the business cycle is that the new classical theory believes that while the new Keynesian theory believes that .

-In the above figure,the movement from point A to B to C to D to E represents

The ________ theory of the business cycle asserts that expected and unexpected changes in aggregate demand lead to fluctuations in real GDP.

Critics of the real business cycle theory claim that

Which of the following is NOT an aggregate demand,mainstream theory of the business cycle?

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

Cost-push inflation can start with

When the AD and SAS curves intersect at a level of real GDP which exceeds potential GDP and there is no government policy undertaken,which of the following will occur?

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

A leftward shift in the aggregate supply curve

Both new Keynesian and new classical cycle theories claim that ________.

In a cost-push inflation,

In a demand-pull inflation,the AD curve shifts ________ and the SAS curve shifts ________.

By itself,an increase in aggregate demand increases GDP by the least amount in the ________.

To prevent cost-push inflation

-In the above figure,suppose the economy starts at point A.The short-run response to an increase in the growth rate of the quantity of money in monetarist business cycle theory moves the economy to point

-Which of the above figures best shows the start of a demand-pull inflation?

Demand-pull inflation starts with a shift of the

During a demand-pull inflation,if the Fed tries to maintain a level of real GDP above potential GDP,

The factor leading to business cycles in the Keynesian model is ________.

The key difference between the new classical theory of the business cycle and the new Keynesian theory of the business cycle is that the new classical theory believes that ________ while the new Keynesian theory believes that ________.

-In the above figure,the movement from point A to B to C to D to E represents

The ________ theory of the business cycle asserts that expected and unexpected changes in aggregate demand lead to fluctuations in real GDP.

Critics of the real business cycle theory claim that

Which of the following is NOT an aggregate demand,mainstream theory of the business cycle?

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

Cost-push inflation can start with

When the AD and SAS curves intersect at a level of real GDP which exceeds potential GDP and there is no government policy undertaken,which of the following will occur?

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 a demand-pull inflation,the AD curve shifts and the SAS curve shifts .

The key difference between the new classical theory of the business cycle and the new Keynesian theory of the business cycle is that the new classical theory believes that while the new Keynesian theory believes that .