Exam 12: Inflation, Jobs, and the Business Cycle

Increases in government expenditure can create cost-push inflation.

Suppose oil prices rise and short-run aggregate supply decreases.If the Fed responds by increasing the quantity of money,then in the short run

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

Consider the U.S.data for inflation and the unemployment rate for the last five decades.Which of the following statements describes the relationship between the two variables?

-Using the above figure,a recession in the monetarist model would start with a

-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 cost-push rise in the price level will initially move the economy to point ________ and to point ________.

According to which theory of the business cycle do changes in the quantity of money never play a role in helping to explain fluctuations in real variables?

Stagflation occurs when the

Demand-pull inflation could start with

If the natural unemployment rate increases,then the short-run Phillips curve shifts ________ and the long-run Phillips curve shifts ________.

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

If the economy is initially at potential GDP and people correctly anticipate an increase in inflation so that their money wage rate adjusts immediately,then

-In the above figure,what might have shifted the short-run Phillips curve from SRPC₁ to SRPC₂ while leaving the long-run Phillips curve unchanged at LRPC?

If the economy is at potential GDP and the Fed increases the quantity of money,then

Which of the following statements about the long-run Phillips curve is correct?

Stagflation occurs when the price level ________ and real GDP ________.

In a demand-pull inflation brought about by increases in the quantity of money,real GDP might increase at times because

Suppose that an economist finds that in most recessions,which are times when employment is low,that real interest rates are extremely high.This finding would pose the biggest problem for the

When the natural unemployment rate changes,what happens to the short-run Phillips curve? To the long-run Phillips curve?

-An economy is at potential GDP and the price level is 100 in the figure above.If aggregate demand unexpectedly increases so that the aggregate demand curve shifts to AD₁,the inflation rate is ________.