Economics Quiz

According to the Beveridge definition, what percentage of unemployment counts as full employment?

• ≤3%

• ≤5%

• ≤10%

• ≤15%

What is one effect of removing union power in the labor market?

• Increased job security

• Sticky wages

• More flexible wages

• Higher unemployment

What is the process of restoring the price level after deflation called?

• Inflation

• Deflation

• Reflation

• Disinflation

What is the goal of a reflationary policy?

• To reduce aggregate demand

• To increase deflation

• To boost aggregate demand and increase inflation

• To maintain current price levels

Which term is used for fiscal/monetary policies designed to boost aggregate demand?

• Deflationary policy

• Reflationary policy

• Inflationary policy

• Disinflationary policy

What did Friedman suggest in 1968?

• Demand-pull inflation

• Long-Run Phillips Curve

• Cost-push inflation

• Hyperinflation

In the Fisher equation, what does "P" denote?

• Price level

• Production cost

• Profit margin

• Population size

What is the effect of an increase in money supply when there is unemployment?

• Decrease in real incomes

• Increase in price level

• Increase in real incomes and national output

• No effect on the economy

What does "spare capacity" in the economy imply?

• Full employment

• Under-used resources

• High inflation

• Decreased demand

What condition minimizes cost-push inflation?

• Shortage of labour

• No shortage of labour

• High demand

• Low supply