Question 1

According to the real business cycle (RBC)  theory,recessions are the result of

Accepted Answer

A)   a fall in growth rate of productivity.
B)   an increase in growth rate of the quantity of money.
C)   an increase in investment.
D)   a decrease in growth rate of the quantity of money.E) A) and B)
F) A) and C)

Question 2

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

Accepted Answer

A)   an unexpected change in aggregate demand
B)   a change by the Fed in the growth rate of the quantity of money
C)   a change in business confidence
D)   a change in the growth rate of productivityE) B) and C)
F) All of the above

Question 3

An increase in the expected inflation rate leads to a movement upward along the short-run Phillips curve.

Accepted Answer

A) True 
 B)False

Question 4

Demand-pull inflation can start when

Accepted Answer

A)   money wage rates rise but the price level does not change.
B)   money wage rates rise faster than prices.
C)   the short-run aggregate supply curve shifts rightward.
D)   the aggregate demand curve shifts rightward.E) All of the above
F) A) and B)

Question 5

An increase in the expected inflation rate leads to ________ the short-run Phillips curve.

Accepted Answer

A)   a movement upward along
B)   a movement downward along
C)   an upward shift of
D)   a downward shift ofE) All of the above
F) A) and B)

Question 6

By itself,an increase in the price of oil shifts the

Accepted Answer

A)   short-run aggregate supply curve leftward and does not shift the aggregate demand curve.
B)   short-run aggregate supply curve rightward and does not shift the aggregate demand curve.
C)   aggregate demand curve leftward and does not shift the short-run aggregate supply curve.
D)   aggregate demand curve rightward and does not shift the short-run aggregate supply curve.E) C) and D)
F) A) and B)

Question 7

During which decade did the United States suffer from the worst cost-push inflation?

Accepted Answer

A)   1960s
B)   1970s
C)   1980s
D)   1990sE) C) and D)
F) A) and D)

Question 8

A rise in the expected inflation rate leads to ________ in the long-run Phillips curve and ________ in the short-run Phillips curve.

Accepted Answer

A)   an upward shift; no shift
B)   a leftward shift; an upward shift
C)   no shift; no shift
D)   no shift; an upward shiftE) A) and B)
F) A) and C)

Question 9

-The figure above shows an economy's Phillips curves.Currently,the inflation rate is 6 percent a year.The natural unemployment rate is ________ percent and the expected inflation rate is ________ percent a year.

Accepted Answer

A)   6; 6
B)   6; 10
C)   4; 6
D)   6; 4E) C) and D)
F) A) and D)

Question 10

The short-run Phillips curve shows the tradeoff between ________,holding the expected inflation rate and the natural unemployment rate constant.

Accepted Answer

A)   the price level and real GDP
B)   inflation and unemployment
C)   the price level and unemployment
D)   inflation and employmentE) A) and C)
F) A) and B)

Question 11

In a persisting demand-pull inflation

Accepted Answer

A)   short-run aggregate supply decreases and aggregate demand increases.
B)   aggregate demand and short-run aggregate supply both decrease.
C)   aggregate demand increases and long-run aggregate supply decreases.
D)   None of the above answers are correct.E) B) and D)
F) None of the above

Question 12

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

Accepted Answer

A)   an increase in the quantity of money
B)   an increase in government expenditure
C)   an increase in taxes
D)   an increase in exportsE) None of the above
F) A) and D)

Question 13

Along a short-run Phillips curve,suppose the expected inflation rate is 6 percent.If the inflation rate turns out to be 8 percent instead,

Accepted Answer

A)   there is a movement upward along the short-run Phillips curve.
B)   there is a movement downward along the short-run Phillips curve.
C)   there is a downward shift of the short-run Phillips curve.
D)   None of the above answers are correct.E) C) and D)
F) All of the above

Question 14

"The short-run Phillips curve is vertical at the natural unemployment rate." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect.The...

Question 15

Stagflation is the combination of a ________ and ________.

Accepted Answer

A)   falling inflation rate; an increasing real GDP
B)   falling price level; an increasing real GDP
C)   rising price level; a decreasing real GDP
D)   rising inflation rate; a decreasing real GDPE) B) and C)
F) A) and D)

Question 16

During the 1970s when both the unemployment rate and inflation rate rose,it is reasonable to conclude that

Accepted Answer

A)   both the short-run and long-run Phillips curves shifted rightward.
B)   both the short-run and long-run Phillips curves shifted leftward.
C)   only the short-run Phillips curve shifted.
D)   only the long-run Phillips curve shifted.E) All of the above
F) A) and B)

Question 17

The short-run Phillips curve intersects the long-run Phillips curve at the expected inflation rate.

Accepted Answer

A) True 
 B)False

Question 18

Define and describe the short-run Phillips curve.

Accepted Answer

The short-run Phillips curve shows the r...

Question 19

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

Accepted Answer

A)   an unexpected change in aggregate demand
B)   a change by the Fed in the growth rate of the quantity of money
C)   a change in business confidence
D)   a change in the growth rate of productivityE) B) and D)
F) B) and C)

Question 20

For an economy at full employment,an increase in the quantity of money will lead to which of the following sequences of shifts in aggregate demand and supply curves?

Accepted Answer

A)   decreased aggregate demand, increased short-run aggregate supply, constant long-run aggregate supply
B)   decreased aggregate demand, decreased short-run aggregate supply, decreased long-run aggregate supply
C)   increased aggregate demand, increased short-run aggregate supply, increased long-run aggregate supply
D)   increased aggregate demand, decreased short-run aggregate supply, constant long-run aggregate supplyE) A) and B)
F) A) and C)

Exam 12: Inflation, Jobs, and the Business Cycle

An increase in the expected inflation rate leads to a movement upward along the short-run Phillips curve.

Correct AnswerverifiedShow Answer

Demand-pull inflation can start when

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According to the real business cycle (RBC) theory,recessions are the result of

Correct AnswerverifiedShow Answer

A rise in the expected inflation rate leads to ________ in the long-run Phillips curve and ________ in the short-run Phillips curve.

Correct AnswerverifiedShow Answer

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

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During the 1970s when both the unemployment rate and inflation rate rose,it is reasonable to conclude that

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-The figure above shows an economy's Phillips curves.Currently,the inflation rate is 6 percent a year.The natural unemployment rate is ________ percent and the expected inflation rate is ________ percent a year.

Correct AnswerverifiedShow Answer

In a persisting demand-pull inflation

Correct AnswerverifiedShow Answer

Stagflation is the combination of a ________ and ________.

Correct AnswerverifiedShow Answer

During which decade did the United States suffer from the worst cost-push inflation?

Correct AnswerverifiedShow Answer

The short-run Phillips curve intersects the long-run Phillips curve at the expected inflation rate.

Correct AnswerverifiedShow Answer

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

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An increase in the expected inflation rate leads to ________ the short-run Phillips curve.

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The short-run Phillips curve shows the tradeoff between ________,holding the expected inflation rate and the natural unemployment rate constant.

Correct AnswerverifiedShow Answer

"The short-run Phillips curve is vertical at the natural unemployment rate." Is the previous statement correct or incorrect?

Correct AnswerverifiedThe statement is incorrect.The...View AnswerShow Answer

By itself,an increase in the price of oil shifts the

Correct AnswerverifiedShow Answer

Define and describe the short-run Phillips curve.

Correct AnswerverifiedThe short-run Phillips curve shows the r...View AnswerShow Answer

For an economy at full employment,an increase in the quantity of money will lead to which of the following sequences of shifts in aggregate demand and supply curves?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Along a short-run Phillips curve,suppose the expected inflation rate is 6 percent.If the inflation rate turns out to be 8 percent instead,

Correct AnswerverifiedShow Answer

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A rise in the expected inflation rate leads to in the long-run Phillips curve and in the short-run Phillips curve.

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-The figure above shows an economy's Phillips curves.Currently,the inflation rate is 6 percent a year.The natural unemployment rate is percent and the expected inflation rate is percent a year.

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Stagflation is the combination of a and .

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The statement is incorrect.The...
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The short-run Phillips curve shows the r...
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