Question 1

If aggregate demand increases and expectations regarding inflation remain constant,

Accepted Answer

A) the economy moves along the short-run Phillips curve. 
B) the short-run Phillips curve shifts to the right. 
C) the short-run Phillips curve shifts to the left. 
D) the long-run Phillips curve shifts to the right. 
A) the economy moves along the short-run Phillips curve. 
B) the short-run Phillips curve shifts to the right. 
C) the short-run Phillips curve shifts to the left. 
D) the long-run Phillips curve shifts to the right.

Question 2

Refer to the information provided in Figure 14.2 below to answer the questions that follow.   Figure 14.2
-Refer to Figure 14.2.Which of the following can change the equilibrium wage rate from $9 to $15?

Accepted Answer

A) The value people put on their leisure time increases. 
B) The value of what firms produce decreases. 
C) The productivity of workers decreases. 
D) the value of what firms produce increases. 
A) The value people put on their leisure time increases. 
B) The value of what firms produce decreases. 
C) The productivity of workers decreases. 
D) the value of what firms produce increases.

Question 3

Cost of living adjustments in labor contracts offer no protection to workers from unexpected inflation.

Accepted Answer

A) True 
 B)False

Question 4

Refer to the information provided in Figure 14.1 below to answer the questions that follow.   Figure 14.1
-Refer to Figure 14.1.If the demand for labor falls from D to D' and wages are sticky on the downward side,there will be unemployment of ________ million.

Accepted Answer

A) 200 
B) 150 
C) 100 
D) 50 
A) 200 
B) 150 
C) 100 
D) 50

Question 5

The natural rate of unemployment is unemployment that occurs as a normal part of the functioning of the economy.

Accepted Answer

A) True 
 B)False

Question 6

If inflation expectations change as a result of an expansionary fiscal policy,this causes

Accepted Answer

A) the long-run Phillips curve to shift. 
B) the short-run Phillips curve to shift. 
C) the short-run Phillips curve to remain constant. 
D) a movement along the short-run Phillips curve. 
A) the long-run Phillips curve to shift. 
B) the short-run Phillips curve to shift. 
C) the short-run Phillips curve to remain constant. 
D) a movement along the short-run Phillips curve.

Question 7

The labor force includes those people with a job and

Accepted Answer

A) those people who are looking for work. 
B) those people training for a job. 
C) those people who formerly worked and are now retired. 
D) homemakers. 
A) those people who are looking for work. 
B) those people training for a job. 
C) those people who formerly worked and are now retired. 
D) homemakers.

Question 8

Refer to the information provided in Figure 14.8 below to answer the questions that follow.   Figure 14.8
-Refer to Figure 14.8.Along SRPC3,expected inflation equals

Accepted Answer

A) 4%. 
B) 5%. 
C) 6%. 
D) cannot be determined from the figure 
A) 4%. 
B) 5%. 
C) 6%. 
D) cannot be determined from the figure

Question 9

The economy experiences both a falling price level and falling unemployment when

Accepted Answer

A) aggregate supply increases with aggregate demand stable. 
B) aggregate demand increases with aggregate supply stable. 
C) aggregate supply decreases with aggregate demand stable. 
D) aggregate demand decrease with aggregate supply stable. 
A) aggregate supply increases with aggregate demand stable. 
B) aggregate demand increases with aggregate supply stable. 
C) aggregate supply decreases with aggregate demand stable. 
D) aggregate demand decrease with aggregate supply stable.

Question 10

What definition of unemployment would you expect classical economists to use?

Accepted Answer

A) anyone who is actively seeking work 
B) anyone who is willing to work if the market wage increases 
C) anyone who is willing to work at the current market wage,but has not yet been able to find employment 
D) anyone who is currently not working 
A) anyone who is actively seeking work 
B) anyone who is willing to work if the market wage increases 
C) anyone who is willing to work at the current market wage,but has not yet been able to find employment 
D) anyone who is currently not working

Question 11

If aggregate demand changes while aggregate supply is stable,output and the unemployment rate are

Accepted Answer

A) positively related. 
B) not related in the short run. 
C) not related neither in the long run nor in the short run. 
D) negatively related. 
A) positively related. 
B) not related in the short run. 
C) not related neither in the long run nor in the short run. 
D) negatively related.

Question 12

What sequence of events results from a decrease in aggregate demand?

Accepted Answer

A) The price level falls,inventories decline,firms respond by increasing output and employment. 
B) The price level falls,inventories increase,firms respond by reducing output and employment. 
C) The price level rises,inventories decline,firms respond by increasing output and employment. 
D) The price level rises,inventories increase,firms respond by increasing output and employment. 
A) The price level falls,inventories decline,firms respond by increasing output and employment. 
B) The price level falls,inventories increase,firms respond by reducing output and employment. 
C) The price level rises,inventories decline,firms respond by increasing output and employment. 
D) The price level rises,inventories increase,firms respond by increasing output and employment.

Question 13

According to the relative-wage explanation of unemployment,workers will be willing to accept wage cuts only if

Accepted Answer

A) they know that unemployment is increasing in other industries. 
B) they can be convinced that they are overpaid relative to workers doing similar jobs at other firms. 
C) they know that workers in other firms and industries are receiving similar cuts. 
D) the economy is in a prolonged recession. 
A) they know that unemployment is increasing in other industries. 
B) they can be convinced that they are overpaid relative to workers doing similar jobs at other firms. 
C) they know that workers in other firms and industries are receiving similar cuts. 
D) the economy is in a prolonged recession.

Question 14

If the unemployment rate rises above the natural rate of unemployment in the short run,the inflation rate will rise.

Accepted Answer

A) True 
 B)False

Question 15

Refer to the information provided in Figure 14.7 below to answer the questions that follow.   Figure 14.7
-Refer to Figure 14.7.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

Accepted Answer

A) E. 
B) B. 
C) C. 
D) D. 
A) E. 
B) B. 
C) C. 
D) D.

Question 16

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

Accepted Answer

A) decreases;increases 
B) increases;doesn't change 
C) increases;increases 
D) doesn't change;doesn't change 
A) decreases;increases 
B) increases;doesn't change 
C) increases;increases 
D) doesn't change;doesn't change

Question 17

If productivity increases as wages increase and firms pay a wage above the market clearing wage,then

Accepted Answer

A) these firms will go out of business in the long run because they will not be able to compete with firms paying lower wages. 
B) these firms will face an excess demand for labor and will be able to hire the best workers in the market. 
C) these firms will have lower profit levels than their competitors. 
D) a potential benefit these firms may receive is a reduction in employee turnover. 
A) these firms will go out of business in the long run because they will not be able to compete with firms paying lower wages. 
B) these firms will face an excess demand for labor and will be able to hire the best workers in the market. 
C) these firms will have lower profit levels than their competitors. 
D) a potential benefit these firms may receive is a reduction in employee turnover.

Question 18

A new policy is implemented that guarantees every adult an annual income of $10,000 whether they work or not.This will most likely shift the

Accepted Answer

A) labor demand curve to the right. 
B) labor supply curve to the left. 
C) labor supply curve to the right. 
D) labor demand curve to the left. 
A) labor demand curve to the right. 
B) labor supply curve to the left. 
C) labor supply curve to the right. 
D) labor demand curve to the left.

Question 19

A decrease in worker productivity

Accepted Answer

A) reduces the demand for labor. 
B) increases the demand for labor. 
C) reduces the supply of labor. 
D) increases the supply of labor. 
A) reduces the demand for labor. 
B) increases the demand for labor. 
C) reduces the supply of labor. 
D) increases the supply of labor.

Question 20

A vertical aggregate supply curve implies a vertical Phillips curve.

Accepted Answer

A) True 
 B)False

Exam 14: The Labor Market in the Macroeconomy

If aggregate demand increases and expectations regarding inflation remain constant,

Refer to the information provided in Figure 14.2 below to answer the questions that follow. Figure 14.2 -Refer to Figure 14.2.Which of the following can change the equilibrium wage rate from $9 to $15?

Cost of living adjustments in labor contracts offer no protection to workers from unexpected inflation.

Refer to the information provided in Figure 14.1 below to answer the questions that follow. Figure 14.1 -Refer to Figure 14.1.If the demand for labor falls from D to D' and wages are sticky on the downward side,there will be unemployment of ________ million.

The natural rate of unemployment is unemployment that occurs as a normal part of the functioning of the economy.

If inflation expectations change as a result of an expansionary fiscal policy,this causes

The labor force includes those people with a job and

Refer to the information provided in Figure 14.8 below to answer the questions that follow. Figure 14.8 -Refer to Figure 14.8.Along SRPC3,expected inflation equals

The economy experiences both a falling price level and falling unemployment when

What definition of unemployment would you expect classical economists to use?

If aggregate demand changes while aggregate supply is stable,output and the unemployment rate are

What sequence of events results from a decrease in aggregate demand?

According to the relative-wage explanation of unemployment,workers will be willing to accept wage cuts only if

If the unemployment rate rises above the natural rate of unemployment in the short run,the inflation rate will rise.

Refer to the information provided in Figure 14.7 below to answer the questions that follow. Figure 14.7 -Refer to Figure 14.7.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

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

If productivity increases as wages increase and firms pay a wage above the market clearing wage,then

A new policy is implemented that guarantees every adult an annual income of $10,000 whether they work or not.This will most likely shift the

A decrease in worker productivity

A vertical aggregate supply curve implies a vertical Phillips curve.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand,supply,and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

The Money Supply and the Federal Reserve System

Money Demand and the Equilibrium Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Costs Shocks in the Asad Model

Financial Crises, stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade,comparative Advantage,and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing and Transitional Economies

Filters

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