Aggregate Supply, Unemployment And Inflation MCQs

Option A: increase reduce

Option B: increase, increase

Option C: reduce, increase

Option D: reduce, reduce

Correct Answer: increase reduce ✔

Option A: Keynesian policies

Option B: Supply-side policies

Option C: Monetarist Policies

Option D: Classical policies

Correct Answer: Supply-side policies ✔

Option A: those willing to work at the going wage labour demand

Option B: labour demand those willing to work at the going wage

Option C: labor demand, labor supply

Option D: those willing to work at the going wage labor supply

Correct Answer: those willing to work at the going wage labor supply ✔

Option A: frictional unemployment

Option B: demand-deficient unemployment

Option C: classical unemployment

Option D: structural unemployment

Correct Answer: structural unemployment ✔

Option A: Inflationary expectations

Option B: unemployment

Option C: the inflation rates

Option D: wage rates

Correct Answer: Inflationary expectations ✔

Option A: the inflation rate, interest rates

Option B: the inflation rate, the unemployment rate

Option C: interest rates, output

Option D: output, employment

Correct Answer: the inflation rate, the unemployment rate ✔

Option A: rise

Option B: fall

Option C: not changes

Option D: fluctuates

Correct Answer: rise ✔

Option A: prices, wages, output and employment

Option B: output prices, employment

Option C: nominal money, the price level, output and employment

Option D: nominal money output prices

Correct Answer: nominal money, the price level, output and employment ✔

Option A: exceeds

Option B: fall below

Option C: fluctuate around

Option D: remain equal to

Correct Answer: remain equal to ✔

Option A: the goods market

Option B: the money markets

Option C: the labor markets

Option D: all of these

Correct Answer: all of these ✔

Option A: monetary growth

Option B: better technology

Option C: more capital

Option D: higher labor supply

Correct Answer: monetary growth ✔

Option A: higher, lower

Option B: higher, higher

Option C: lower, lower

Option D: zero, zero

Correct Answer: higher, lower ✔

Option A: a nominal money stock target

Option B: a balanced budget

Option C: an inflation target

Option D: The pursuit of a target real interest rate

Correct Answer: a balanced budget ✔

Option A: the contention that workers in one industry may be unwilling to accept a wage cut unless they know that workers in other industries are receiving similar cuts

Option B: employment contracts that stipulate workers’ wages usually for a period of one to three years

Option C: unspoken agreements between workers and firms that firms will not cut wages

Option D: the incentive that firms may have to hold wages above the market clearing rate

Correct Answer: the contention that workers in one industry may be unwilling to accept a wage cut unless they know that workers in other industries are receiving similar cuts ✔

Option A: Shifts in aggregate supply

Option B: changes in export demand due to the state of the world economy

Option C: business confidence

Option D: business expectations

Correct Answer: Shifts in aggregate supply ✔

Option A: a high rate of inflation: along with a low rate of unemployment

Option B: simultaneously low rates of inflation and unemployment

Option C: simultaneously high rates of inflation and unemployment

Option D: a high rate of unemployment along with a low rate of inflation

Correct Answer: simultaneously high rates of inflation and unemployment ✔

Option A: Vertical or nearly vertical

Option B: upward sloping

Option C: downward sloping

Option D: horizontal or nearly horizontal

Correct Answer: Vertical or nearly vertical ✔

Option A: negative relationship between the inflation rate and labor demand

Option B: positive relationship between labor supply and the inflation rate

Option C: positive relationship between the inflation rate and the employment the

Option D: negative relationship between the inflation rate and the unemployment rate

Correct Answer: negative relationship between the inflation rate and the unemployment rate ✔

Option A: that can be produced if structural unemployment is zero

Option B: that can be produced at a zero-unemployment rate

Option C: that can be sustained in the long run without inflation

Option D: that can be sustained in the long run, if the inflation rate is zero

Correct Answer: that can be sustained in the long run without inflation ✔

Option A: the long-run aggregate demand curve is horizontal at the natural rate of inflation

Option B: the long run aggregate demand curve is vertical at potential GDP

Option C: the long run aggregate demand curve is vertical at potential GDP

Option D: The long run supply curve is horizontal at the natural rate of inflation

Correct Answer: the long run aggregate demand curve is vertical at potential GDP ✔

Option A: have chosen not to work at the market wage

Option B: have given up looking for a job but would accept a job at the current wage if one were offered to them.

Option C: are too productive to be hired at the current wage

Option D: are unable to find a job at the current wage rate

Correct Answer: have chosen not to work at the market wage ✔

Option A: a vertical (or almost vertical)

Option B: a downward sloping

Option C: a horizontal (or almost horizontal)

Option D: an upward sloping

Correct Answer: a vertical (or almost vertical) ✔

Option A: minimum wage agreements

Option B: trade

Option C: scale economies

Option D: insider-outsider distinctions

Correct Answer: F. all of the above ✔

Option A: 30%

Option B: 10%

Option C: 70%

Option D: 40%

Correct Answer: 40% ✔

Option A: voluntary unemployment

Option B: classical unemployment

Option C: voluntary unemployment

Option D: Frictional unemployment

Correct Answer: voluntary unemployment ✔

Option A: Smaller

Option B: Larger

Option C: the same size

Option D: None of these

Correct Answer: Larger ✔

Option A: price level, aggregate economy

Option B: tax rate, government budget

Option C: wage rate, labor market

Option D: interest rate, market for loanable funds

Correct Answer: wage rate, labor market ✔

Option A: shoe leather costs

Option B: menu costs

Option C: income redistribution

Option D: uncertainly

Correct Answer: all of the above ✔

Option A: horizontal, natural rate of inflation

Option B: horizontal natural rate of unemployment

Option C: vertical natural rate of inflation

Option D: vertical equilibrium rate of unemployment

Correct Answer: vertical equilibrium rate of unemployment ✔

Option A: numbers of employees

Option B: welfare plans

Option C: budget deficits

Option D: expenditures

Correct Answer: budget deficits ✔

Option A: fall

Option B: increase

Option C: remain the same

Option D: fluctuates

Correct Answer: increase ✔

Option A: long run, short run

Option B: flexible imperfect markets

Option C: short-term long run

Option D: long run, imperfect markets

Correct Answer: short-term long run ✔

Option A: demand, supply

Option B: IS, LM

Option C: AD, AS

Option D: Labor demand, labor supply

Correct Answer: AD, AS ✔

Option A: inflation

Option B: a supply shock

Option C: crowding out

Option D: inflation illusion

Correct Answer: inflation ✔

Option A: wages and prices are sticky

Option B: wages and prices are flexible

Option C: the economy may operate below full capacity

Option D: the economy is always at full capacity

Correct Answer: F. B and D ✔

Option A: minimize negotiation costs

Option B: minimize unemployment effects

Option C: guarantee that only the least productive workers will be laid off.

Option D: will equitable spread the layoffs among junior and senior workers

Correct Answer: minimize negotiation costs ✔

Option A: an implicit or social contract

Option B: a relative-wage contract

Option C: employment at will

Option D: an explicit contract

Correct Answer: an implicit or social contract ✔

Option A: New classical economists

Option B: Keynesian.

Option C: Monetarists

Option D: Marxists.

Correct Answer: Monetarists ✔

Option A: lower unemployment rate will tend to lower the inflation rate

Option B: lower unemployment rate will tend to raise the inflation rate

Option C: raise inflation rate will tend to raise the unemployment rate

Option D: lower inflation rate will tend to raise the unemployment rate

Correct Answer: lower unemployment rate will tend to raise the inflation rate ✔

Option A: the price level and the unemployment rate

Option B: the inflation rate and the unemployment rate

Option C: the level of aggregate output and the price level

Option D: the inflation rate and the level of aggregate demand

Correct Answer: the inflation rate and the unemployment rate ✔

Option A: New classical economists

Option B: Keynesian.

Option C: Marxists

Option D: Monetarists

Correct Answer: Keynesian. ✔

Option A: only in the short run, and not without inflation

Option B: only in the long run and not without inflation

Option C: only is the short run and only if the price level is constant

Option D: only in the long run and only if the price level is constant

Correct Answer: only in the short run, and not without inflation ✔

Option A: frictional unemployment and seasonal unemployment

Option B: frictional unemployment and cyclical unemployment

Option C: frictional unemployment and structural unemployment

Option D: cyclical unemployment and structural unemployment

Correct Answer: frictional unemployment and structural unemployment ✔

Option A: neither monetary nor fiscal policy will have an effect on output and employment

Option B: monetary but not fiscal policy will have an effect on output and employment

Option C: Fiscal, but not monetary policy will have an effect on output and employment

Option D: both monetary and fiscal policy will have an effect on output and employment

Correct Answer: neither monetary nor fiscal policy will have an effect on output and employment ✔

Option A: quickly

Option B: slowly

Option C: very infrequently

Option D: instantly

Correct Answer: quickly ✔