Business Cycles

Question 1

For two straight quarters, business inventories increase at a sharp rate. This most likely indicates

Aan expanding economy

Ba recovering economy

Cthe beginning of a recession

Dan increase in inflation

Ea record unemployment rate

Question 2

If the consumer price index begins to increase dramatically, which of the following is likely true?

AThe output gap is positive and near the peak.

BThe output gap is positive and near the trough.

CThere is no output gap and the economy is growing.

DThe output gap is negative and near the peak.

EThe output gap is negative and near the trough.

Question 3

At which point in the business cycle is there the largest inflationary gap?

AThe peak

BThe trough

CDuring expansion

DDuring contraction

EAt full employment

Short-Run Aggregate Supply (SRAS)

Question 4

An increase in the price level corresponds to

Aa decrease in aggregate demand

Ban increase in aggregate supply

Cmovement along the aggregate supply curve

Dan inflationary gap

Ea recessionary gap

Question 5

A decrease in energy prices in the short run generally

Adecreases real output

Bincreases nominal output but not real output

Cincreases real output

Dcorresponds to an increase in the unemployment rate

Ehas no impact on either nominal or real output

Question 6

Which of the following would correspond to a decrease in real output due to an increase in energy prices?

AA shift of the aggregate demand curve to the left

BMovement left and down along the short-run aggregate supply curve

CMovement right and up along the short-run aggregate supply curve

DA shift of the short-run aggregate supply curve to the left

EA shift of the short-run aggregate supply curve to the right