Question : 61) When cost-push inflation starts, real GDP ________ and the : 1240530

61) When cost-push inflation starts, real GDP ________ and the unemployment rate ________.

A) decreases; falls

B) does not change; falls

C) decreases; rises

D) does not change; does not change

E) increases; falls

62) When cost-push inflation starts, real GDP ________ and the price level ________.

A) decreases; falls

B) does not change; falls

C) decreases; rises

D) does not change; does not change

E) increases; falls

63) At the start of a cost-push inflation,

A) the price level remains constant and real GDP decreases.

B) the price level and real GDP both increase.

C) the price level remains constant and real GDP increases.

D) the price level rises and real GDP decreases.

E) the price level rises and real GDP does not change.

64) 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) i and iii

E) iii only

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

A) aggregate supply curve leftward and does not shift the aggregate demand curve.

B) aggregate supply curve rightward and does not shift the aggregate demand curve.

C) aggregate demand curve leftward and does not shift the aggregate supply curve.

D) aggregate demand curve rightward and does not shift the aggregate supply curve.

E) aggregate demand curve rightward and shifts the potential GDP line rightward.

66) The AS curve shifts leftward if

A) good weather increases agricultural harvests.

B) OPEC reduces world oil prices.

C) tax cuts stimulate labor supply.

D) the money wage rate increases.

E) government expenditure increases.

67) If oil prices increase, then in the short run, real GDP will ________ and the price level will ________.

A) increase; rise

B) increase; fall

C) decrease; rise

D) decrease; fall

E) not change; rise

68) In the short-run, an increase in the price of raw materials will ________ the price level and ________ real GDP.

A) raise; increase

B) raise; decrease

C) raise; not change

D) lower; increase

E) lower; decrease

69) By itself, a supply shock, such as a hike in the price of oil, can

A) cause real GDP to permanently decrease year after year.

B) not result in persisting inflation.

C) be inflationary as long as there is no policy response.

D) result in persisting inflation if aggregate supply persistently increases.

E) result in a persisting wage-price spiral.

70) A combination of recession and inflation is called

A) an expansion.

B) stagflation.

C) a business cycle.

D) depression.

E) a recession.