review 8

Cost-push inflation can start with A) a decrease in investment. B) an increase in oil prices. C) an increase in government expenditure. D) a decrease in the quantity of money.

B

In a demand-pull inflation brought about by increases in the quantity of money, real GDP might increase at times because A) tax rates decline. B) real wages fall. C) money wages fall. D) real wages rise

B

Which of the following could start a demand-pull inflation? A) an increase in government expenditure B) an increase in imports C) a decrease in the quantity of money D) an increase in the money prices of raw materials

A

A cost-push inflation spiral results if the Fed's response to stagflation is to keep A) decreasing aggregate demand. B) decreasing aggregate supply. C) increasing aggregate demand. D) increasing aggregate supply

C

Demand-pull inflation starts as the A)LAS curve shifts leftward. B)LAS curve shifts rightward. C)AD curve shifts rightward. D)AD curve shifts leftward

C

Stagflation is the combination of a ________ and ________. 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 GDP

C

Suppose that the money prices of raw materials increase so that short-run aggregate supply decreases. If the Federal Reserve does not respond, the higher money price of raw materials will: I. repeatedly shift the aggregate demand curve rightward and raise the price level. II. shift the aggregate demand curve rightward and the aggregate supply curve leftward, raising prices. III. result initially in lower employment and a higher price level. A) I only B) both I and II C) both II and III D) III only

D