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Final

ECON 1010 Study Guide - Final Guide: Ceteris Paribus, Aggregate Demand, Aggregate SupplyExam


Department
Economics
Course Code
ECON 1010
Professor
Edward Haltrecht
Study Guide
Final

This preview shows pages 1-3. to view the full 37 pages of the document.
Parkin/Bade, Economics: Canada in the Global Environment, 8e
Copyright © 2013 Pearson Canada Inc. 1114
Chapter 28 Canadian Inflation, Unemployment, and Business Cycle
28.1 Inflation Cycles
1) Which of the following would cause the aggregate demand curve to keep shifting rightward
year after year?
A) a one-time tax cut
B) a one-time increase in government expenditures on goods and services
C) inflation
D) excess wage demands
E) a persistent increase in the quantity of money
Answer: E
Diff: 2 Type: MC
Topic: Inflation Cycles
Source: Study Guide
2) At full employment an increase in the quantity of money (ceteris paribus) can create a
A) demand-pull inflation, as can an increase in government expenditure.
B) demand-pull inflation, but an increase in government expenditure cannot.
C) cost-push inflation, as can an increase in government expenditure.
D) cost-push inflation, but an increase in government expenditure cannot.
E) demand-pull and a cost-push inflation, as can an increase in government expenditure.
Answer: A
Diff: 2 Type: MC
Topic: Inflation Cycles
3) Demand-pull 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.
Answer: A
Diff: 1 Type: MC
Topic: Inflation Cycles
Source: Study Guide
4) Inflation resulting from an increase in aggregate demand is called
A) cost-push inflation.
B) demand-pull inflation.
C) anticipated inflation.
D) unanticipated inflation.
E) political inflation.
Answer: B
Diff: 1 Type: MC
Topic: Inflation Cycles

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Parkin/Bade, Economics: Canada in the Global Environment, 8e
Copyright © 2013 Pearson Canada Inc. 1115
5) Which one of the following can create a demand-pull inflation?
A) a sharp increase in the price of oil
B) higher wages negotiated by unions
C) a cut in the interest rate
D) a decrease in investment as a result of a decrease in expected future profits
E) a decrease in government expenditure on goods and services
Answer: C
Diff: 2 Type: MC
Topic: Inflation Cycles
6) Stagflation occurs when the economy experiences both
A) rising inflation and increasing real GDP.
B) falling inflation and decreasing real GDP.
C) rising inflation and decreasing real GDP.
D) falling inflation and increasing real GDP.
E) low exports and low imports.
Answer: C
Diff: 1 Type: MC
Topic: Inflation Cycles
7) Suppose the economy is in long-run equilibrium when the price of oil rises. Which one of the
following is not a short-run effect of this situation?
A) an increase in real GDP above long-run real GDP
B) an increase in the price level
C) a decrease in real GDP
D) an increase in unemployment
E) a decrease in consumer spending
Answer: A
Diff: 2 Type: MC
Topic: Inflation Cycles
8) Suppose OPEC unexpectedly collapses, which leads to a fall in the price of oil. As a result,
the price level
A) 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.
Answer: C
Diff: 1 Type: MC
Topic: Inflation Cycles

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Parkin/Bade, Economics: Canada in the Global Environment, 8e
Copyright © 2013 Pearson Canada Inc. 1116
9) An increase in the price level due to an increase in the price of oil
A) creates stagflation in the short-run and will trigger a cost-push inflation.
B) creates stagflation in the short-run and may trigger off a cost-push inflation.
C) increases output above potential GDP.
D) leads to an increase in the money wage rate.
E) leads to a decrease in the money wage rate.
Answer: B
Diff: 2 Type: MC
Topic: Inflation Cycles
Source: Study Guide
10) Cost-push inflation can result from an initial
A) decrease in personal income taxes.
B) increase in personal income taxes.
C) increase in government expenditure.
D) increase in the money wage rate.
E) increase in transfer payments.
Answer: D
Diff: 1 Type: MC
Topic: Inflation Cycles
11) Stagflation can result from
A) a leftward shift of the demand curve.
B) a rightward shift of the demand curve.
C) a leftward shift of the short-run aggregate supply curve.
D) a rightward shift of the short-run aggregate supply curve.
E) a rightward shift of the long-run aggregate supply curve.
Answer: C
Diff: 1 Type: MC
Topic: Inflation Cycles
12) A cost-price inflation spiral results if the policy response to stagflation is to keep
A) decreasing aggregate demand.
B) decreasing short-run aggregate supply.
C) increasing aggregate demand.
D) increasing short-run aggregate supply.
E) doing nothing.
Answer: C
Diff: 2 Type: MC
Topic: Inflation Cycles
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