Exam 28: The Labor Market in the Macroeconomy

As the unemployment rate declines in response to the economy moving closer and closer to capacity output, the aggregate price level rises at a decreasing rate.

According to the classical theory, an expansionary monetary policy ________ the price level and ________ output in the long run.

Refer to the information provided in Figure 28.6 below to answer the question(s) that follow. Figure 28.6 -Refer to Figure 28.6. Panel C represents the typical shape of the

The type of unemployment that arises during recessions is known as

Efficiency wages generally increase worker morale.

Frictional and structural unemployment usually decrease during recessions.

Classical economists believe that the absence of sticky wages results in a vertical aggregate supply curve.

Refer to the information provided in Figure 28.5 below to answer the question(s) that follow. Figure 28.5 -Refer to Figure 28.5. Which panel shows the typical relationship between the price level and the unemployment rate?

Related to the Economics in Practice on p. 571: According to the study cited in the Economics in Practice, the ________ someone is unemployed, the ________ it is for that person to get a job.

If, as a result of imperfect information, firms set their wage rates above the market clearing wage rate

Refer to the information provided in Figure 28.8 below to answer the question(s) that follow. Figure 28.8 -Refer to Figure 28.8. Expected inflation at Point C equals

If the measured unemployment rate is 6% and the natural unemployment rate is 4%, then

Other things equal, the unemployment rate falls if

Refer to the information provided in Figure 28.7 below to answer the question(s) that follow. Figure 28.7 -Refer to Figure 28.7. Suppose the economy is at Point A, and the cost of inputs is fixed. An increase in government spending could move the economy to Point

If a country has a population of 400 million, 160 million people employed and 40 million people looking for work, then its unemployment rate is

Refer to the information provided in Figure 28.2 below to answer the question(s) that follow. Figure 28.2 -Refer to Figure 28.2. Assume that the productivity of workers increases as the wage rate increases. The efficiency wage

If aggregate demand changes when aggregate supply is stable, then the Phillips curve is negatively sloped.

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.

Refer to the information provided in Figure 28.7 below to answer the question(s) that follow. Figure 28.7 -Refer to Figure 28.7. If the natural unemployment rate equals 4%, the unemployment rate at U₀ could be

If aggregate demand increases and expectations regarding inflation remain constant