Exam 12: The Business Cycle, Inflation, and Deflation

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?

Which theory assumes that business cycles occur because of changes in business confidence?

A rational expectation is

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

-In the above figure, which path represents a demand-pull inflation?

Stagflation occurs when the

Deflation can start with

Cost-push inflation might initially result from

The Phillips curve describes the relationship between real GDP and inflation.

Looking at U.S. economic history between 1964 and 2009, we see that growth in real GDP

The long-run Phillips curve is ________.

A criticism of the real business cycle (RBC)theory is that

-In the above figure, the economy initially is at point A and then an increase in the quantity of money moves the economy to point D. At point D, the real wage rate has

An increase in the natural unemployment rate shifts both the long-run Phillips curve and the short-run Phillips curve rightward.

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

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

A rational expectation of inflation is

Which of the following results in the aggregate demand curve shifting rightward year after year?

-In the above figure, suppose that the economy is at point A. An unexpected increase in the inflation rate to 6 percent will result in a movement to point

In real business cycle theory, a decrease in productivity leads to all of the following events EXCEPT ________.