Question 1

A movement along the SAS curve that brings a lower price level and a decrease in real GDP is equivalent to a

Accepted Answer

A)   movement along a short-run Phillips curve that brings a decrease in the inflation rate and an increase in the unemployment rate.
B)   movement along a short-run Phillips curve that brings an increase in the inflation rate and an increase in the unemployment rate.
C)   shift in the short-run Phillips curve that brings a decrease in the inflation rate and an increase in the unemployment rate.
D)   shift in the short-run Phillips curve that brings an increase in the inflation rate and an increase in the unemployment rate.E) None of the above
F) A) and C)

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

What is the Phillips curve?
Discuss both the short-run and long-run Phillips curve.

Accepted Answer

In general,a Phillips curve shows a rela...

Question 4

Which of the following statements about a cost-push inflation is correct?

Accepted Answer

A)   Cost-push inflation starts when an increase in aggregate demand "pushes" costs higher.
B)   Cost-push inflation might start with a rise in the price of raw materials, but it requires increases in the quantity of money to persist.
C)   To persist, cost-push inflation needs a continual series of cost hikes with no change in aggregate demand.
D)   The United States has never experienced a cost-push inflation.E) A) and D)
F) All of the above

Question 5

During a cost-push inflation spiral,the money wage rate ________ and the quantity of money ________.

Accepted Answer

A)   increases; increases
B)   increases; does not change
C)   does not change; increases
D)   does not change; does not changeE) A) and D)
F) A) and C)

Question 6

A decrease in the expected inflation rate shifts the short-run Phillips curve

Accepted Answer

A)   downward and shifts the long-run Phillips curve leftward.
B)   upward and shifts long-run Phillips curve rightward.
C)   downward and creates a movement downward along the long-run Phillips curve.
D)   upward and creates a movement upward along the long-run Phillips curve.E) A) and B)
F) A) and C)

Question 7

An increase in the expected inflation rate shifts

Accepted Answer

A)   both the short-run and the long-run Phillips curves upward.
B)   the short-run but not the long-run Phillips curve upward.
C)   the long-run but not the short-run Phillips curve upward.
D)   neither the short-run nor the long-run Phillips curve.E) All of the above
F) A) and B)

Question 8

Demand-pull inflation occurs when

Accepted Answer

A)   aggregate demand increases persistently.
B)   aggregate supply and aggregate demand decrease persistently.
C)   the government increases its expenditures.
D)   oil prices increase substantially.E) All of the above
F) None of the above

Question 9

The government estimates that the natural unemployment rate has increased from 4.8 percent in 2006 to 5.2 percent in late 2012.If these estimates are accurate,the short-run Phillips curve has ________.

Accepted Answer

A)   shifted rightward
B)   shifted leftward
C)   not shifted
D)   None of the above answers are correct because the effect on the short-run Phillips curve is ambiguous.E) B) and D)
F) All of the above

Question 10

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

Accepted Answer

A)   was not correlated with fluctuations in productivity growth.
B)   falls following an increase in productivity growth.
C)   rises following an increase in productivity growth.
D)   rises following a decrease in productivity growth.E) A) and D)
F) All of the above

Question 11

Cost-push inflation starts with

Accepted Answer

A)   an increase in aggregate demand.
B)   a decrease in aggregate demand.
C)   an increase in short-run aggregate supply.
D)   a decrease in short-run aggregate supply.E) A) and C)
F) None of the above

Question 12

A larger than expected increase in aggregate demand will lead to ________ in the ________ of the business cycle.

Accepted Answer

A)   a recession; new Keynesian cycle theory
B)   a recession; Keynesian cycle theory
C)   an expansion; new classical cycle theory
D)   an expansion; real business cycle theoryE) A) and B)
F) A) and C)

Question 13

The long-run Phillips curve is

Accepted Answer

A)   vertical at potential GDP.
B)   the horizontal sum of the short-run Phillips curves.
C)   vertical at the natural unemployment rate.
D)   the vertical sum of the short-run Phillips curves.E) A) and B)
F) B) and D)

Question 14

A demand-pull inflation occurred in the United States during most of the later part of the

Accepted Answer

A)   1960s.
B)   2000s.
C)   1980s.
D)   1990s.E) None of the above
F) A) and B)

Question 15

-In the above figure,the economy is at point A.An increase in oil prices occurs after which the Fed responds by increasing the quantity of money.The economy moves from point A to

Accepted Answer

A)   D to point C.
B)   B to point C.
C)   C to point D.
D)   C to point B.E) A) and B)
F) C) and D)

Question 16

Over the last several years,the money supply in Indonesia as increased by 9 percent in 2003 to 14 percent in 2005 and 23 percent in 2007. At the same time,real GDP has grown steadily at over 4 percent annually. These changes would be shown as
I. rightward shifts of the AD curve
II. a movement down along the short-run Phillips curve
III. rightward shifts of the LAS curve

Accepted Answer

A)   I and III.
B)   I, II and III.
C)   II only.
D)   I only.E) B) and C)
F) C) and D)

Question 17

The early 1990s were the last period of substantial demand-pull inflation in the U.S.

Accepted Answer

A) True 
 B)False

Question 18

Both the new classical and new Keynesian business cycle theories agree that

Accepted Answer

A)   expected changes in aggregate demand lead to the business cycle.
B)   unexpected changes in aggregate demand cannot result in a business cycle.
C)   the money wage rate is influenced by rational expectations of the price level.
D)   the long-term nature of wage contracts allow expected changes in the price level to cause business cycles.E) A) and B)
F) None of the above

Question 19

In the long run,what is the tradeoff between inflation and unemployment?
Explain your answer using Phillips curve analysis.

Accepted Answer

In the long run,there is no tradeoff bet...

Question 20

If the unemployment rate initially equals its natural rate,then if the inflation rate rises above its expected rate,the unemployment rate ________.

Accepted Answer

A)   equals the natural rate
B)   remains constant
C)   falls below its natural rate
D)   rises above its natural rateE) A) and B)
F) B) and D)

Exam 12: Inflation, Jobs, and the Business Cycle

-In the above figure,the economy is at point A.An increase in oil prices occurs after which the Fed responds by increasing the quantity of money.The economy moves from point A to

Correct Answer
verified

What is the Phillips curve? Discuss both the short-run and long-run Phillips curve.

Correct Answer
verified
In general,a Phillips curve shows a rela...
View Answer

Demand-pull inflation occurs when

Correct Answer
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A decrease in the expected inflation rate shifts the short-run Phillips curve

Correct Answer
verified

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

Correct Answer
verified

The government estimates that the natural unemployment rate has increased from 4.8 percent in 2006 to 5.2 percent in late 2012.If these estimates are accurate,the short-run Phillips curve has ________.

Correct Answer
verified

An increase in the expected inflation rate shifts

Correct Answer
verified

A movement along the SAS curve that brings a lower price level and a decrease in real GDP is equivalent to a

Correct Answer
verified

A demand-pull inflation occurred in the United States during most of the later part of the

Correct Answer
verified

Correct Answer
verified

The early 1990s were the last period of substantial demand-pull inflation in the U.S.

Correct Answer
verified

A larger than expected increase in aggregate demand will lead to in the of the business cycle.

Correct Answer
verified

During a cost-push inflation spiral,the money wage rate and the quantity of money .

Correct Answer
verified

Which of the following statements about a cost-push inflation is correct?

Correct Answer
verified

If the unemployment rate initially equals its natural rate,then if the inflation rate rises above its expected rate,the unemployment rate ________.

Correct Answer
verified

Both the new classical and new Keynesian business cycle theories agree that

Correct Answer
verified

Cost-push inflation starts with

Correct Answer
verified

The long-run Phillips curve is

Correct Answer
verified

In the long run,what is the tradeoff between inflation and unemployment? Explain your answer using Phillips curve analysis.

Correct Answer
verified
In the long run,there is no tradeoff bet...
View Answer

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

Correct Answer
verified

Exam 12: Inflation, Jobs, and the Business Cycle

-In the above figure,the economy is at point A.An increase in oil prices occurs after which the Fed responds by increasing the quantity of money.The economy moves from point A to

Correct AnswerverifiedShow Answer

What is the Phillips curve? Discuss both the short-run and long-run Phillips curve.

Correct AnswerverifiedIn general,a Phillips curve shows a rela...View AnswerShow Answer

Demand-pull inflation occurs when

Correct AnswerverifiedShow Answer

A decrease in the expected inflation rate shifts the short-run Phillips curve

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The government estimates that the natural unemployment rate has increased from 4.8 percent in 2006 to 5.2 percent in late 2012.If these estimates are accurate,the short-run Phillips curve has ________.

Correct AnswerverifiedShow Answer

An increase in the expected inflation rate shifts

Correct AnswerverifiedShow Answer

A movement along the SAS curve that brings a lower price level and a decrease in real GDP is equivalent to a

Correct AnswerverifiedShow Answer

A demand-pull inflation occurred in the United States during most of the later part of the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The early 1990s were the last period of substantial demand-pull inflation in the U.S.

Correct AnswerverifiedShow Answer

A larger than expected increase in aggregate demand will lead to ________ in the ________ of the business cycle.

Correct AnswerverifiedShow Answer

During a cost-push inflation spiral,the money wage rate ________ and the quantity of money ________.

Correct AnswerverifiedShow Answer

Which of the following statements about a cost-push inflation is correct?

Correct AnswerverifiedShow Answer

If the unemployment rate initially equals its natural rate,then if the inflation rate rises above its expected rate,the unemployment rate ________.

Correct AnswerverifiedShow Answer

Both the new classical and new Keynesian business cycle theories agree that

Correct AnswerverifiedShow Answer

Cost-push inflation starts with

Correct AnswerverifiedShow Answer

The long-run Phillips curve is

Correct AnswerverifiedShow Answer

In the long run,what is the tradeoff between inflation and unemployment? Explain your answer using Phillips curve analysis.

Correct AnswerverifiedIn the long run,there is no tradeoff bet...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
In general,a Phillips curve shows a rela...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

A larger than expected increase in aggregate demand will lead to in the of the business cycle.

Correct Answer
verified

During a cost-push inflation spiral,the money wage rate and the quantity of money .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
In the long run,there is no tradeoff bet...
View Answer

Correct Answer
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