Frictional unemployment is to ________ as structural unemployment is to ________.

Final Exam Practice

Quiz
•
Social Studies
•
University
•
Hard
DR Fazle
Used 6+ times
FREE Resource
9 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
search; mismatch
temperature; rigidity
job training; output gap
all of the above
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
A good reason for policy makers to pursue a goal of stabilizing economic activity is that
high unemployment is always accompanied by high variability of unemployment
in a stable economy, there is little or no frictional unemployment
in a stable economy, there is little or no structural inflation
none of the above
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Shocks to the macroeconomy will cause a change in the equilibrium real interest rate, except ________.
permanent supply shocks
aggregate demand shocks
temporary supply shocks
all of the above
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
The Relationship Between Stabilizing Inflation and Stabilizing Economic Activity
The equilibrium real interest rate is the rate ________.
at which the output gap is zero
at which the inflation rate is low
controlled by the central bank
all of the above
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
If higher inflation ensues from a temporary negative supply shock, and in response, the central bank raises interest rates, then the resulting decrease in AD will return inflation back to its original level ________.
and no further action will be required by the central bank
but the ensuing positive output gap will lead to higher inflation once again so further interest rate increases will be required by the central bank to return inflation back to its long run level
but the ensuing negative output gap will lead to short-run increases in AS and the central bank will have to "undo" its original interest rate hike in order to return inflation back to its target rate
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
The marginal propensity to consume describes ________.
the tendency to consume fringe, or unusual items
the impact of a change in spending on income
the impact on consumption resulting from a change in income
7.
FILL IN THE BLANK QUESTION
30 sec • 1 pt
Autonomous consumption is 700 and the marginal propensity to consume is 0.6. Calculate the average propensity to save when disposable income is (a) 10,000, (b) 12,000, and (c) 15,000.
8.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
If high incomes inspire more saving than low incomes ________.
the average propensity to consume falls as income rises
the marginal propensity to consume rises as income rises
autonomous consumption falls as income rises
the average propensity to consume rises as wealth rises
9.
OPEN ENDED QUESTION
30 sec • 1 pt
An economy has a fixed price level, no imports, and no income taxes. MPC is 0.80, and real GDP is $250 billion. Businesses increase investment by $5 billion.
a. Calculate the multiplier and the change in real GDP
b. Calculate the new real GDP and explain why real GDP increases by more than $5 billion.
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