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chapter 28.doc

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Department
Economics
Course
ECON 1010
Professor
Steven Edwards
Semester
Summer

Description
Economics Canada in the Global Environment 7e ParkinChapter 28 Canadian Inflation Unemployment and Business Cycle281 Inflation Cycles1 Which of the following would cause the aggregate demand curve to keep shifting rightward year after year A A onetime tax cutB A onetime increase in government expenditures on goods and servicesC InflationD Excess wage demandsE A persistent increase in the quantity of moneyAnswerEDiff 2TopicInflation CyclesSourceStudy Guide2 At full employment an increase in the quantity of money ceteris paribus can create aA demandpull inflation as can an increase in government expenditureB demandpull inflation but an increase in government expenditure cannotC costpush inflation as can an increase in government expenditureD costpush inflation but an increase in government expenditure cannotE demandpull and a costpush inflation as can an increase in government expenditureAnswerADiff 2TopicInflation Cycles3 Demandpull inflation occurs when A aggregate demand increases B aggregate supply decreases C input costs rise D people incorrectly forecast inflation E unemployment is above the natural rate AnswerADiff 1TopicInflation CyclesSourceStudy Guide4 Inflation resulting from an increase in aggregate demand is called A costpush inflation B demandpull inflation C anticipated inflation D unanticipated inflation E political inflation AnswerBDiff 1TopicInflation Cycles1 2010 Pearson Education Canada5 Which one of the following can create ademandpull inflation A A sharp increase in the price of oilB Higher wages negotiated by unionsC A cut in the interest rateD A decrease in investment as a result of a decrease in expected future profitsE A decrease in government expenditure on goods and servicesAnswerCDiff 2TopicInflation Cycles6 Stagflation occurs when the economy experiences both A rising inflation and increasing real GDPB falling inflation and decreasing real GDPC rising inflation and decreasing real GDPD falling inflation and increasing real GDPE low exports and low importsAnswerCDiff 1TopicInflation Cycles7 Suppose the economy is in longrun equilibrium when the price of oil rises Which one of the following is not a shortrun effect of this situation A an increase in real GDP above longrun real GDPB an increase in the price levelC a decrease in real GDPD an increase in unemploymentE a decrease in consumer spendingAnswerADiff 2TopicInflation Cycles8 Suppose OPEC unexpectedly collapses which leads to a fall in the price of oilAs a result the price levelA rises and real GDP increases B rises and real GDP decreases C falls and real GDP increases D falls and real GDP decreases E rises and real GDP remains the same AnswerCDiff 1TopicInflation Cycles2 2010 Pearson Education Canada9 An increase in the price level due to an increase in the price of oilA creates stagflation in the shortrun and will trigger a costpush inflationB creates stagflation in the shortrun and may trigger off a costpush inflationC increases output above potential GDPD leads to an increase in the money wage rateE leads to a decrease in the money wage rateAnswerBDiff 2TopicInflation CyclesSourceStudy Guide10 Costpush inflation can result from an initialA decrease in personal income taxes B increase in personal income taxes C increase in government expenditureD increase in the money wage rateE increase in transfer payments AnswerDDiff 1TopicInflation Cycles11 Stagflation can result fromA a leftward shift of the demand curveB a rightward shift of the demand curveC a leftward shift of the shortrun aggregate supply curveD a rightward shift of the shortrun aggregate supply curveE a rightward shift of the longrun aggregate supply curveAnswerCDiff 1TopicInflation Cycles12 A costprice inflation spiral results if the policy response to stagflation is to keep A decreasing aggregate demand B decreasing shortrun aggregate supply C increasing aggregate demand D increasing shortrun aggregate supply E doing nothing AnswerCDiff 2TopicInflation Cycles3 2010 Pearson Education Canada
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