Untitled14 PDF

Exam
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) Which of the following would be likely to lead to a decrease in the natural rate of unemployment?
A) a prolonged recession
B) a decrease in the length of time during which people can receive unemployment benefits
C) an increase in the number of teenage workers in the workforce
D) all of the above
1)
Answer: B
2) Structural unemployment
A) is due to seasonal changes.
B) arises from recessions.
C) is due to changes in the structure of the economy.
D) arises from the time it takes employers to find appropriate employees.
2)
Answer: C
3) Cyclical unemployment
A) is due to changes in the structure of the economy.
B) arises from the time it takes employers to find appropriate employees.
C) is due to seasonal changes.
D) arises from recessions.
3)
Answer: D
4) Structural unemployment
A) arises from the time it takes employers to find appropriate employees.
B) is less severe during economic downturns.
C) is most likely to arise from a recession.
D) is most likely to arise as a result of technological changes.
4)
Answer: D
5) If you hear a person saying "I lost my job and I was replaced by a computer," you should conclude
that this person is ________ unemployed.
A) frictionally
B) seasonally
C) structurally
D) cyclically
5)
Answer: C
6) If you hear a person saying "I lost my job at the Gateway plant because computer manufacturing is
slow due to a slowdown in the economy," you should conclude that this person is ________
unemployed.
A) cyclically
B) frictionally
C) structurally
D) seasonally
6)
Answer: A
7) Economists define the labor force to include
A) all individuals of work age, regardless of whether they are working or looking for a job.
B) only people who are working full-time.
C) people who are not working but are actively looking for a job, and people who are working.
D) people who are working.
Answer: C
1
7)
8) The number unemployed divided by the labor force is the

A) civilian population.
B) per-capita employment rate.
C) unemployment rate.
D) discouraged worker total.
8)
Answer: C
9) If a country has a population of 300 million, 135 million people employed and 15 million people
looking for work, then its unemployment rate is
A) 5%.
B) 10%.
C) 15%.
D) 35%.
9)
Answer: B
10) Employment tends to fall when
A) aggregate output rises.
C) aggregate output falls.
B) unemployment rises.
D) labor productivity falls.
10)
Answer: C
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
11) If a household member is in the labor force, it is because he or she has decided his or her time is
more valuable in non-market activities.
Answer:
True
False
12) If a person is not employed but is looking for work, he is not in the labor force.
Answer:
True
True
True
True
True
True
16)
False
17) The labor force is the fraction of the population with a job.
Answer:
15)
False
16) The unemployment rate will never be zero because the economy is static.
Answer:
14)
False
15) Cyclical unemployment is that which rises in recessions and falls during expansions.
Answer:
13)
False
14) Frictional unemployment arises when the economy changes, making some jobs obsolete.
Answer:
12)
False
13) Structural unemployment is the type that arises due to recessions.

Answer:
11)
17)
False
18) The shape of the short run aggregate supply curve is impacted by changes in the
A) goods market.
B) financial market.
C) money market.
D) labor market.
18)
Answer: D
19) According to ________ economists, the only types of unemployment that exist in an economy are
structural and frictional unemployment.
A) Keynesian
B) Marxist
C) classical
D) monetarist
Answer: C
2
19)
20) According to classical economists, ________ unemployment does not persist in the economy
because wages will always adjust to ensure equilibrium in the labor market.
A) frictional
B) the natural rate of
C) excessive
D) structural
20)
Answer: C
Refer to the information provided in Figure 14.1 below to answer the questions that follow.
Figure 14.1
21) Refer to Figure 14.1. Suppose there is an increase in the fertility rate and this causes some men and
women to place a higher value on their time spent in non-market activities. This will cause
A) the labor supply curve to shift to the right of S.
B) the labor supply curve to shift to the left of S.
C) the labor demand curve to shift from D to D'.
D) the labor demand curve to shift from D' to D.
21)
Answer: B
22) Refer to Figure 14.1. If the demand for labor ________ and wages are sticky on the downward side,
there will be unemployment of 150 million.
A) falls from D to D'
B) rises from D' to D
C) falls from D
D) remains at D'
22)
Answer: A
23) Refer to Figure 14.1. The demand for labor falls from D to D'. If firms enter into social, or implicit,
contracts with workers not to cut wages, then the wage rate will ________ and employment will
________.
A) fall to $8; fall to 200 million
B) fall to $8; remain at 300 million
C) remain at $10; fall to 150 million
D) remain at $10; fall to 200 million
23)
Answer: C
24) One way to reduce employee turnover is to pay efficiency wages
A) at the going market wage
B) below the equilibrium wage
C) above the equilibrium wage.
D) at the equilibrium wage.
Answer: C
24)
Figure 14.2
25) Refer to Figure 14.2. The equilibrium number of people employed is ________ million people and
the equilibrium wage rate is $________.
A) 150; 15
B) 270; 15
C) 180; 6
D) 210; 9
25)
Answer: D
26) Refer to Figure 14.2. At a wage rate of $________, there is a surplus of labor equal to ________
million people.
A) 6; 180
B) 6; 60
C) 15; 120
D) 15; 150
26)
Answer: C
27) Refer to Figure 14.2. At a wage rate of $________ , there is a shortage of labor equal to ________
million people.
A) 15; 120
B) 15; 150
C) 6; 60
D) 6; 180
27)
Answer: C
28) Refer to Figure 14.2. According to classical economists, if the wage rate is $15 the wage rate will
________ to eliminate the ________.
A) increase; surplus
B) increase; shortage
C) decline; surplus
D) decline; shortage
28)
Answer: C
29) Refer to Figure 14.2. If the value people put on their leisure time increases, the equilibrium wage
rate
A) would stay at $15.
B) could change from $9 to $15.
C) would increase to $15.
D) could change from $9 to $6.
29)
Answer: B
30) Refer to Figure 14.2. If the productivity of workers decreases, the equilibrium wage rate
A) would stay at $15.
B) could change from $9 to $6.
C) could change from $9 to $15.
D) would increase to $15.
Answer: B
30)
31) Ceteris paribus, which of the following will shift the labor demand curve to the right as a result of
the demand for labor being a derived demand?
A) more people entering the labor force
B) a decrease in the value of leisure
C) an increase in the value of output that firms produce
D) an increase in the value of leisure
31)
Answer: C
32) Ceteris paribus, which of the following will shift the labor supply curve to the left?
A) an increase in the value people place on their leisure time
B) an increase in the price of the output of the firm
C) an increase in worker productivity
D) all of the above
32)
Answer: A
33) Ceteris paribus, which of the following will shift the labor supply curve to the right?
A) an increase in the price of the output of the firm
B) an increase in the wage rate
C) a decrease in the value people place on their leisure time
D) all of the above
33)
Answer: C
34) A decrease in the productivity of workers shifts the labor ________ curve to the ________.
A) supply; right
B) demand; right
C) demand; left
D) supply; left
34)
Answer: C
35) An increase in worker productivity
A) reduces the supply of labor.
C) increases the supply of labor.
B) reduces the demand for labor.

D) increases the demand for labor.
35)
Answer: D
36) Tyler is not employed. The value Tyler places on his leisure time is $15 an hour. Tyler looks for a
job and all the offers he has are for less than $15 an hour. Tyler should supply
A) between 0 and 20 hours per week in the labor market.
B) exactly 40 hours per week in the labor market.
C) between 20 and 40 hours per week in the labor market.
D) 0 hours in the labor market.
36)
Answer: D
37) Stephanie is currently not employed. She places a value of $8 an hour on her time in nonmarket
activities. If Stephanie is offered a job paying $10 an hour
A) she is indifferent between supplying hours to the labor market and using her time in
nonmarket activities.
B) she should supply a positive number of hours in the labor market and allocate no time to
C) she should supply a positive number of hours in the labor market and to nonmarket activities.
D) she should supply 0 hours in the labor market and allocate all of her time to nonmarket
activities.
Answer: C
37)
38) Patrick is currently not employed. He places a value of $13 an hour on his time in nonmarket
activities. If Patrick is offered a job paying $8 an hour
A) he should supply 0 hours in the labor market.
B) he is indifferent between supplying hours to the labor market and using his time in
C) he should supply a positive number of hours in the labor market and allocate no time to
D) he should supply a positive number of hours in the labor market and to nonmarket activities.
38)
Answer: A
39) Arnold is contemplating whether he should take a job offered to him. Arnold should
A) take the job if taking the job implies he will enjoy more leisure.
B) not take the job if taking the job implies he will enjoy less leisure.
C) not take the job if the value of his leisure is less than the wage rate the job pays.
D) not take the job if the value of his leisure is greater than the wage rate the job pays.
39)
Answer: D
40) If a policy is implemented that guarantees all adults an annual income of $40,000 whether they
work or not, then this would most likely shift the
A) labor supply curve to the right.
B) labor demand curve to the right.
C) labor demand curve to the left.
D) labor supply curve to the left.
40)
Answer: D
41) The government raises the marginal income tax rates so that after-tax wages are decreased. This
most likely will shift the labor
A) supply curve to the left.
B) demand curve to the left.
C) supply curve to the right.
D) demand curve to the right.
41)
Answer: A
42) If a new governmental policy decreases unemployment benefits, we would expect the labor
________ curve to shift to the ________.
A) demand; right
B) supply; right
C) demand; left
D) supply; left
42)
Answer: B
43) One of the tenets of the classical view of the labor market is that the ________ adjustments are
necessary to clear the labor market.
A) interest rate
B) price
C) wage
D) all of the above
43)
Answer: D
44) If firms start offering fewer employment benefits, such as less vacation time and a less desirable
medical plan, we would expect the labor ________ curve to shift to the ________.
A) demand; left
B) supply; right
C) supply; left
D) demand; right
44)
Answer: C
45) The classical view of the labor market is basically consistent with the assumption of a vertical (or
almost vertical) ________ curve.
A) aggregate expenditures
B) aggregate demand
C) production possibility
D) aggregate supply
Answer: D
45)
46) Classical economists believe that a reason the aggregate supply curve is ________ is because people
who are not working are those who have chosen not to work at the prevailing wage rate.
A) positively sloped
B) horizontal
C) vertical
D) negatively sloped
46)
Answer: C
47) According to the classical theory, a contractionary monetary policy ________ the price level and
________ output in the long run.
A) increases; increases
B) decreases; increases
C) decreases; doesn't change
D) doesn't change; doesn't change
47)
Answer: C
48) Assume that wage rates, on the aggregate, decrease as a result of newly negotiated union contracts.
This will tend to
A) increase the effectiveness of fiscal policy, but decrease the effectiveness of monetary policy to
change output.
B) increase the effectiveness of both monetary and fiscal policy to change output.
C) have no impact on the effectiveness of either monetary or fiscal policy to change output.
D) decrease the effectiveness of both monetary and fiscal policy to change output.
48)
Answer: D
49) According to the ________ economists, those who are not working have chosen not to work at the
market wage.
A) Keynesian
B) modern monetarist
C) classical
D) neo-Marxist
49)
Answer: C
50) Those who believe that wages adjust ________ to clear the labor market also believe that the
________ curve is vertical.
A) slowly; AS
B) quickly; AS
C) quickly; AD
D) slowly, AD
50)
Answer: B
51) A definition of unemployment that ________ economists would use is "Anyone who is willing to
work at the current market wage, but has not yet been able to find employment."
A) classical
B) monetarist
C) Keynesian
D) Marxist
51)
Answer: A
52) Those who believe that the wage rate adjusts quickly to clear the labor market are likely to believe
that the aggregate supply curve is vertical.
Answer:
True
False
53) If the actual unemployment rate is below NAIRU, the change in the inflation rate will be negative.
Answer:
True
True
53)
False
54) The classical view of the labor market holds that unemployment in the economy consists of cyclical,
frictional, and structural unemployment.
Answer:
52)
False
54)
55) Classical economists believe that economic policies are effective because they affect aggregate
demand in the economy.
Answer:
True
False
56) If firms pay wages lower than the market clearing wage, their profits will be increased.
Answer:
True
55)
56)
False
57) Suppose the wage rate in the labor market is $20 and the demand for labor increases. If wages are
sticky
A) wages decrease to eliminate the surplus.
B) unemployment decreases.
C) unemployment increases.
D) unemployment stays the same.
57)
Answer: B
58) Suppose the equilibrium wage rate in the labor market is $20 and the demand for labor decreases.
If wages are sticky, there will be a
A) surplus of labor and the wage rate declines.
B) shortage of labor and the wage rate increases.
C) surplus of labor and the wage rate increases.
D) surplus of labor and the wage rate stays the same.
58)
Answer: D
59) If the wage rate in the labor market is $12 and more previously unemployed people exited the labor
force, which of the following statements is correct?
A) If wages are sticky, the unemployment rate stays the same.
B) If wages are flexible, then wages will decrease.
C) If wages are flexible, the unemployment rate increases.
D) If wages are sticky, the unemployment rate decreases.
59)
Answer: D
60) If the wage rate in the labor market is $17 and the productivity of workers decreases, which of the
following statements is incorrect?
A) The labor demand curve shifts to the left.
B) If wages are sticky, there will be a surplus in the labor market.
C) If wages are sticky, there will be a shortage in the labor market.
D) If wages are flexible, there will be a decrease in wages.
60)
Answer: C
61) If wages are sticky, a decrease in labor
A) supply decreases the wage rate.
C) demand increases the wage rate.
B) demand decreases the wage rate.

D) none of the above
61)
Answer: D
62) The downward rigidity of wages as an explanation for the existence of unemployment is known as
A) sticky wages.
B) locked wages.
C) minimum wages.
D) crashing wages.
Answer: A
62)
63) Social contracts are ________ agreements between workers and firms that firms will not cut wages.
A) written
B) formal
C) unspoken
D) union
63)
Answer: C
64) General Motors saw the demand for its automobiles drop by 15%. Even though the demand for its
automobiles decreased, GM did not cut the wages of its non-unionized workers. This is an
example of
A) an explicit contract not to cut wages.
B) a relative-wage contract.
C) an implicit or social contract not to cut wages.
D) employment-at-will.
64)
Answer: C
65) Apple experienced a 10% drop in its sales. Even though the demand for its computers decreased,
Apple did not cut the wages of its non-unionized workers. This is an example of
A) an implicit or social contract not to cut wages.
B) poor management.
C) employment-at-will.
D) an explicit contract not to cut wages.
65)
Answer: A
66) Suppose that flight attendants are laid off during a recession because of an unspoken agreement
between the flight attendants and airline executives that wages will not be reduced. This example is
consistent with the
A) explicit contract explanation of unemployment.
B) implicit contract explanation of unemployment.
C) efficiency wage explanation of unemployment.
D) relative-wage explanation of unemployment.
66)
Answer: B
67) The ________ explanation for the existence of downwardly sticky wages emphasizes the contention
that workers in one industry may be unwilling to accept a wage cut, unless they know that workers
in other firms and industries are receiving similar cuts.
A) living-wage
B) relative-wage
C) minimum-wage
D) nominal-wage
67)
Answer: B
68) According to the ________ explanation of unemployment, workers will be willing to accept wage
cuts only if they know that workers in other firms and industries are receiving similar cuts.
A) relative-wage
B) nominal-wage
C) living-wage
D) minimum-wage
68)
Answer: A
69) Workers in the coal mining industry are laid off during a recession because they are unwilling to
accept a wage cut unless they know that workers in other industries are receiving similar cuts. This
example is consistent with the
A) relative-wage explanation of unemployment.
B) explicit contract explanation of unemployment.
C) efficiency wage explanation of unemployment.
D) social contract explanation of unemployment.
Answer: A
9
69)
70) The percentage of workers whose wages are set by explicit contracts increases. This should
A) cause the labor market to always be at an equilibrium, even if there is a change in the demand
for labor.
B) make it easier for the labor market to reach an equilibrium after a change in the demand for
labor.
C) have no impact on the movement of the labor market toward equilibrium after a change in
the demand for labor.
D) make it more difficult for the labor market to reach an equilibrium after a change in the
demand for labor.
70)
Answer: D
71) Employment contracts that stipulate workers' wages, usually for a period of 1 to 3 years, are known
as
A) explicit contracts.
B) social contracts.
C) implicit contracts.
71)
Answer: A
72) Suppose that postal employees are laid off during a recession because their wages have been
locked into place by a three-year contract. This example is consistent with the
A) efficiency wage explanation of unemployment.
B) social contract explanation of unemployment.
C) relative-wage explanation of unemployment.
D) explicit contract explanation of unemployment.
72)
Answer: D
73) Explicit contracts generally stipulate workers' wages for a period of
A) 3 to 5 years.
B) 90 days.
C) 1 to 3 years.
D) no more than 1 year.
73)
Answer: C
74) To improve workers' morale, a firm pays higher wages for its workers. This firm is paying
A) minimum wages.
B) sticky wages.
C) efficiency wages.
D) flexible wages.
74)
Answer: C
75) Which of the following is a reason why firms pay efficiency wages?
A) to reduce shirking of work
B) to reduce turnovers
C) to improve morale
D) all of the above
Answer: D
10
75)
Figure 14.3
76) Refer to Figure 14.3. Assume that the productivity of workers decreases as the wage rate decreases.
The efficiency wage
A) could either be above or below $10.
B) would be below $10.
C) would equal $10.
D) would be above $10.
76)
Answer: D
77) Refer to Figure 14.3. If this firm pays the efficient wage of $9
A) there will be an excess supply of labor of 3,000.
B) the supply of labor will increase until $9 is also the equilibrium wage.
C) there will be an excess demand for labor of 3,000.
D) the firm's demand for labor will decrease until $9 is also the equilibrium wage.
77)
Answer: C
78) Efficiency wage theory suggests that firms may hold wages ________ the market clearing rate
because they believe that the productivity of workers ________ with the wage rate.
A) below; decreases
B) below; increases
C) above; decreases
D) above; increases
78)
Answer: D
79) The theory which holds that productivity of workers increases with the wage rate is the
A) efficiency wage theory.
B) minimum wage theory.
C) nominal wage theory.
D) living wage theory.
79)
Answer: A
80) If productivity increases as wages increase and firms pay a wage ________ the market clearing
wage, then a potential benefit these firms may receive is a(n) ________ in employee turnover.
A) below; increase
B) above; reduction
C) below; reduction
D) above; increase
Answer: B
11
80)
81) A firm may benefit by paying workers ________ than the market clearing wage because the higher
wages may lead to ________ worker morale.
A) more; declining
B) more; improved
C) less; declining
D) less; improved
81)
Answer: B
82) If, as a result of imperfect information, firms set their wage rates ________ the market clearing
wage rate, there will be a shortage of workers.
A) below
B) above
C) at
D) above or below
82)
Answer: A
83) If, as a result of imperfect information, firms set their wage rates ________ the market clearing
wage rate, there will be a surplus of workers.
A) below
B) above
C) at
D) above or below
83)
Answer: B
84) Minimum wage laws contribute to a ________ unemployment rate by raising wages above the
market clearing level in some labor markets.
A) market equilibrium
B) lower
C) higher
D) natural
84)
Answer: C
85) The ________ contributes to a ________ unemployment rate among teenaged workers.
A) efficiency wage law; higher
B) minimum wage law; higher
C) efficiency wage law; lower
D) minimum wage law; lower
85)
Answer: B
Figure 14.4
86) Refer to Figure 14.4. A minimum wage of $10

A) will lead to unemployment of 60.
B) will lead to unemployment of 40.
C) will lead to unemployment of 20.
D) will have no effect because the minimum wage is set at the equilibrium wage and for a
minimum wage to have any effect on the labor market it must be below the equilibrium
wage.
Answer: D
12
86)
87) Refer to Figure 14.4. A minimum wage of ________ will lead to unemployment of 40.
A) $8
B) $10
C) $12
D) > $12
87)
Answer: C
88) Refer to Figure 14.4. In an attempt to increase worker productivity, this firm would pay wages
________ per hour.
A) of $10
B) > $10
C) of $8
D) < $8
88)
Answer: B
89) Related to the Economics in Practice on p. 586: If extending the duration of unemployment benefits
does discourage unemployed workers from looking for jobs, then ceteris paribus,
A) the labor supply curve will not shift.
B) the labor supply curve will shift to the left.
C) the labor supply curve will become vertical.
D) the labor supply curve will shift to the right.
89)
Answer: B
90) Related to the Economics in Practice on p. 586: ________ the duration of unemployment benefits
appears to have ________ impact in discouraging unemployed workers from looking for jobs
during ________.
A) Extending; a larger; economic recessions than during economic expansions
B) Reducing; a very large; economic recessions and economic expansions
C) Reducing; the same; economic recessions and economic expansions
D) Extending; a smaller; economic recessions than during economic expansions
90)
Answer: D
91) If the minimum wage is set below the market clearing wage, wages will be "sticky" in the
downward direction.
Answer:
True
False
92) Sticky wages increase unemployment.

Answer:
True
92)
False
93) Efficiency wages generally increase worker morale.

Answer:
True
93)
False
94) Cost of living adjustments in labor contracts offer partial protection to workers from unexpected
inflation.
Answer:
True
True
94)
False
95) Efficiency wages may increase worker productivity.

Answer:
91)
95)
False
96) The unemployment rate falls if
A) aggregate demand decreases.
C) the demand for labor decreases.
B) aggregate output decreases.

D) the supply of labor decreases.
Answer: D
13
96)
97) When aggregate demand decreases, the price level ________, inventories ________ and firms
respond by ________ output and employment.
A) falls; decline; increasing
B) rises; increase; increasing
C) rises; decline; increasing
D) falls; increase; reducing
97)
Answer: D
98) When aggregate demand increases, the price level ________, inventories ________ and firms
respond by ________ output and employment.
A) falls; decline; increasing
B) rises; increase; increasing
C) rises; decline; increasing
D) falls; increase; reducing
98)
Answer: C
Figure 14.5
99) Refer to Figure 14.5. Which panel shows the typical relationship between the price level and the
unemployment rate?
A) A
B) B
C) C
D) D
99)
Answer: A
100) As the unemployment rate decreases in response to the economy moving toward capacity output,
the aggregate price level
A) rises.
B) is stable.
C) falls at an increasing rate.
D) falls at a declining rate.
Answer: A
14
100)
101) If aggregate demand increases while aggregate supply is stable, aggregate output will ________
and the unemployment rate will ________.
A) decrease; increase
B) increase; increase
C) increase; decrease
D) decrease; decrease
101)
Answer: C
102) If the aggregate supply is ________, an increase in the price level does not change the
unemployment rate.
A) vertical
B) positively sloped
C) negatively sloped
D) horizontal
102)
Answer: A
103) If aggregate demand decreases while aggregate supply is stable, income will ________ and the
unemployment rate will ________.
A) decrease; decrease
B) increase; increase
C) decrease; increase
D) increase; decrease
103)
Answer: C
104) The relationship between inflation and unemployment is depicted by the
A) Phillips curve.
B) aggregate demand curve.
C) aggregate supply curve.
D) production possibility curve.
Answer: A
15
104)
Figure 14.6
105) Refer to Figure 14.6. Panel B represents the typical shape of the
A) short-run aggregate supply curve.
B) long-run aggregate supply curve.
C) short-run Phillips curve.
D) long-run Phillips curve.
105)
Answer: A
106) Refer to Figure 14.6. Panel A represents the typical shape of the
A) short-run Phillips curve.
B) long-run aggregate supply curve.
C) long-run Phillips curve.
D) short-run aggregate supply curve.
106)
Answer: A
107) Refer to Figure 14.6. Panel C represents the typical shape of the
A) short-run Phillips curve.
B) short-run aggregate demand curve.
C) long-run Phillips curve.
D) short-run aggregate supply curve.
Answer: C
16
107)
Figure 14.7
108) Refer to Figure 14.7. The unemployment rate at U1

A) equals the natural rate.
C) equals zero.
108)
B) is greater than the natural rate.
D) is lower than the natural rate.
Answer: A
109) Refer to Figure 14.7. If the natural unemployment rate equals 4%, the unemployment rate at U0
could be
A) 3%.
B) 4%.
C) 5%.
D) 6%.
109)
Answer: A
110) Refer to Figure 14.7. Suppose the economy is at Point A, a decrease in money supply will move the
economy to Point ________ in the short run.
A) E
B) B
C) C
D) D
110)
Answer: B
111) Refer to Figure 14.7. If the economy is on SRPC3 , then the expected inflation rate is
A) 4%
B) 5%
C) 6%
111)
Answer: A
112) Refer to Figure 14.7. The expected inflation rate is 6% if the economy is
A) above SRPC2 .
B) on SRPC2 .
C) on SRPC1 .
D) on SRPC3 .
112)
Answer: B
113) Refer to Figure 14.7. Suppose the economy is initially at Point A. An expansionary fiscal policy
moves the economy to Point ________ in the short run.
A) E
B) B
C) C
D) D
Answer: C
17
113)
114) Refer to Figure 14.7. Suppose the economy is at Point B. What can possibly move the economy to
Point E?
A) a rightward shift in the AS curve
B) a rightward shift in the AD curve
C) a leftward shift in the AS curve
D) a leftward shift in the AD curve
114)
Answer: A
115) Refer to Figure 14.7. An expansionary fiscal policy followed by a leftward shift in the AS curve
could move the economy from Point A to Point ________, and then to Point ________.
A) E; B
B) B; E
C) C; D
D) D; C
115)
Answer: C
116) Refer to Figure 14.7. An contractionary monetary policy followed by a rightward shift in the AS
curve could move the economy from Point A to Point ________, and then to Point ________.
A) E; B
B) B; E
C) C; D
D) D; C
116)
Answer: B
117) Refer to Figure 14.7. If the economy is at Point A, a sudden decrease in the price of oil without any
change in the aggregate demand shifts the short-run Phillips curve (SRPC) from
A) SRPC3 to SRPC1.
B) SRPC2 to SRPC1.
C) SRPC1 to SRPC2.
D) SRPC1 to SRPC3.
117)
Answer: D
118) Refer to Figure 14.7. If the economy is at Point A, the cost of raw material increased dramatically,
and the aggregate demand did not change, the economy could move to Point ________.
A) A
B) B
C) E
D) D
118)
Answer: D
119) Refer to Figure 14.7. Suppose the economy is at Point A and the cost of inputs is fixed. A decrease in
government spending could move the economy to Point ________.
A) E
B) B
C) C
D) D
119)
Answer: B
120) If aggregate demand decreases and expectations regarding inflation remain constant
A) the economy moves along the short-run Phillips curve.
B) the long-run Phillips curve shifts to the right.
C) the short-run Phillips curve shifts to the right.
D) the short-run Phillips curve shifts to the left.
120)
Answer: A
121) If inflation expectations change, a contractionary fiscal policy causes
A) the short-run Phillips curve to shift.
B) a movement along the short-run Phillips curve.
C) the long-run Phillips curve to shift.
D) the short-run Phillips curve to remain constant.
Answer: A
18
121)
122) If aggregate supply decreases and aggregate demand remains unchanged

A) the price level will remain unchanged, but aggregate output will decrease.
B) there will be a positive relationship between the price level and the level of aggregate output.
C) there will be a negative relationship between the price level and the level of aggregate output.
D) there will be no systematic relationship between the price level and the level of aggregate
output.
122)
Answer: C
123) The economy experiences both ________ and ________ when aggregate supply decreases and
aggregate demand remains unchanged.
A) deflation; economic growth
B) inflation; economic growth
C) deflation; unemployment
D) inflation; unemployment
123)
Answer: D
124) The economy experiences both a ________ price level and ________ unemployment when
aggregate supply increases with aggregate demand stable.
A) falling; rising
B) rising; rising
C) falling; falling
D) rising; falling
124)
Answer: C
125) There is ________ relationship between the price level and the level of aggregate output when both
aggregate supply and aggregate demand are changing simultaneously.
A) an infinite
B) a positive
C) a negative
D) no systematic
125)
Answer: D
126) If the ________ curve shifts from year to year and the ________ curve does not, then the short run
Phillips curve would be downward sloping.
A) inflation; employment
B) aggregate demand; aggregate supply
C) aggregate supply; aggregate demand
D) employment; inflation
126)
Answer: B
127) If the ________ curve shifts from year to year and the ________ curve does not, then the Phillips
curve would show a positive relationship between inflation and unemployment rates.
A) employment; inflation
B) aggregate supply; aggregate demand
C) inflation; employment
D) aggregate demand; aggregate supply
127)
Answer: B
128) If inflationary expectations increase, the Phillips curve will
A) shift to the left.
B) become upward sloping.
C) shift to the right.
D) become vertical.
128)
Answer: C
129) If, when recovering from a recession, unemployment falls but inflation does not increase, the most
likely cause of this is
A) aggregate demand is increasing but aggregate supply is decreasing.
B) both aggregate demand and aggregate supply are decreasing.
C) aggregate demand is increasing at a faster rate than aggregate supply.
D) aggregate supply is increasing at a faster rate than aggregate demand.
Answer: D
19
129)
130) As the unemployment rate declines in response to the economy moving closer and closer to
capacity output, the aggregate price level falls at an increasing rate.
Answer:
True
False
131) At the natural rate of unemployment, structural unemployment is zero.

Answer:
True
True
True
True
133)
False
134) A decrease in inflationary expectations shifts the economy's short-run Phillips curve to the left.
Answer:
132)
False
133) If aggregate demand changes when aggregate supply is stable, then the Phillips curve is negatively
sloped.
Answer:
131)
False
132) The Phillips curve suggests that if we want to lower the unemployment rate, we must accept a
lower inflation rate in return.
Answer:
130)
134)
False
135) In the long run, the Phillips curve will be ________ at the natural rate of unemployment if the
long-run aggregate supply curve is vertical at potential output.
A) horizontal
B) negatively sloped
C) positively sloped
D) vertical
135)
Answer: D
136) If the Phillips curve is ________ in the long run, there is no trade-off between inflation and
unemployment in the long run.
A) concave
B) convex
C) vertical
D) negatively sloped
Answer: C
20
136)
Figure 14.8
137) Refer to Figure 14.8. Expected inflation at Point D ________ expected inflation at Point C.
A) is less than
B) equals
C) is greater than
D) cannot be determined from the figure
137)
Answer: C
138) Refer to Figure 14.8. Expected inflation at Point C equals
A) 4%.
B) 5%.
C) 6%.
138)
Answer: B
139) Refer to Figure 14.8. Expected inflation equals 6%
A) along SRPC1.
B) along SRPC2.
C) below SRPC3.
D) along SRPC3.
139)
Answer: B
140) Refer to Figure 14.8. Along SRPC1 , expected inflation equals
A) 6%.
B) 5%.
C) 4%.
140)
Answer: B
141) If the measured unemployment rate is 6% and the natural unemployment rate is 4%, then
A) frictional unemployment is -2%.
B) structural unemployment is 10%.
C) cyclical unemployment is 2%.
D) frictional unemployment is 2%.
141)
Answer: C
142) Economists who argue that the AS curve is vertical in the long run at potential output also argue
that in the long run, the ________ is vertical at the natural rate of unemployment.
A) production possibility curve
B) aggregate demand curve
C) Phillips curve
D) aggregate expenditures curve
Answer: C
21
142)
143) The ________ unemployment rate can be pushed below the ________ rate, but only in the short run
and not without inflation.
A) natural; cyclical
B) measured; natural
C) cyclical; frictional
D) frictional; structural
143)
Answer: B
144) If the economy is at potential output, expected inflation
A) equals actual inflation.
B) equals the natural rate of unemployment.
C) is greater than actual inflation.
D) is less than actual inflation.
144)
Answer: A
145) As a result of a shifting aggregate supply curve during the 1990s, the U.S. economy experienced a
positive trade-off between inflation and unemployment.
Answer:
True
False
146) A vertical aggregate supply curve implies a horizontal Phillips curve.

Answer:
True
True
True
True
148)
False
149) The cyclical rate of unemployment is unemployment that occurs as a normal part of the functioning
of the economy.
Answer:
147)
False
148) If unemployment is above the natural rate of unemployment, then output is above potential
output.
Answer:
146)
False
147) If the unemployment rate rises above the natural rate of unemployment in the short run, the
inflation rate will fall.
Answer:
145)
False
22
149)

Untitled14 PDF

Caricato da

Informazioni sul documento

Descrizione originale:

Titolo originale

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

Untitled14 PDF

Caricato da

Copyright:

Formati disponibili

Exam

8) The number unemployed divided by the labor force is the

13) Structural unemployment is the type that arises due to recessions.

B) reduces the demand for labor.

B) demand decreases the wage rate.

86) Refer to Figure 14.4. A minimum wage of $10

92) Sticky wages increase unemployment.

93) Efficiency wages generally increase worker morale.

95) Efficiency wages may increase worker productivity.

B) aggregate output decreases.

108) Refer to Figure 14.7. The unemployment rate at U1

122) If aggregate supply decreases and aggregate demand remains unchanged

131) At the natural rate of unemployment, structural unemployment is zero.

146) A vertical aggregate supply curve implies a horizontal Phillips curve.

Potrebbero piacerti anche