Exam 12: Inflation, Jobs, and the Business Cycle

A one-time increase in aggregate demand creates inflation.

If the prices of crucial raw materials increase,

"All for One,but None for All" In an article regarding how Great Britain and France are addressing the economic crisis in 2008,Britain's prime minister "is eager to encourage consumer spending" while France's president "wants to boost investment in both the private and public sectors." Both leaders are concerned because "hardly a day goes by without some manufacturing company announcing painful restructuring,plant closures or temporary lay-offs." Www)ft.com,11/24/2008 If the governments can increase consumption or investment while holding the expected inflation constant,there would be

Increases in the prices of raw materials can create cost-push inflation.

When workers and employers correctly anticipate an increase in inflation caused by an increase in aggregate demand,

One assumption of the new classical model is that

The new classical cycle theory predicts that an unexpected increase in aggregate demand ________ create a business cycle and an expected increase in aggregate demand ________ create a business cycle.

"Shoe Industry under Pressure Amid Rising Costs" Rising costs have forced about 15 per cent of shoe manufacturers in a major south China industrial centre to shut down or relocate in the past year...[the firms have] identified rising wages as a key factor behind the closures and relocations from Dongguan...The problems in the footwear industry reflect broader issues affecting manufacturers across China's Pearl River Delta..." Www)ft.com,2/26/2008 Using an AS/AD framework to describe the events in the story,there would be a

Which of the following is the factor that leads to business cycles in the monetarist business cycle theory?

Which of the following is NOT a potential start of a demand-pull inflation?

As far as cost-push inflation goes,the United States

A one-time increase in the price of oil followed by a one-time increase in aggregate demand produce

The intertemporal substitution effect is the factor that creates business cycles in the Keynesian theory of the business cycle.

According to the real business cycle theory,an increase in the price of a resource,such as oil,that decreases the demand for loanable funds will ________ employment and ________ real GDP.

The long-run Phillips curve shows that in the long run,policymakers can

"The long-run Phillips curve is vertical at the expected inflation rate." Is the previous statement correct or incorrect?

An increase in the money wage rate shifts the SAS curve ________ and an increase in the money prices of raw materials shifts the SAS curve ________.

The new classical cycle theory views anticipated fluctuations in aggregate demand as the main source of business cycle economic fluctuations.

A cost-push inflation spiral results if the Fed's response to stagflation is to keep

"The short-run Phillips curve shifts leftward when the inflation rate rises." Is the previous statement correct or incorrect?