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Aggregate Supply, Unemployment & Inflation - MCQ Online Exam Quiz

Important questions about Aggregate Supply, Unemployment & Inflation - MCQ. Aggregate Supply, Unemployment & Inflation - MCQ MCQ questions with answers. Aggregate Supply, Unemployment & Inflation - MCQ exam questions and answers for students and interviews.

The abolition of income tax would probably ______ the number of workers in employment and _______ the equilibrium rate of unemployment?

Options

A : increase reduce

B : increase, increase

C : reduce, increase

D : reduce, reduce

Policies to reduce unemployment by reducing union power, tax cuts, reductions in unemployment benefit and investment subsidies are examples of ?

Options

A : Keynesian policies

B : Supply-side policies

C : Monetarist Policies

D : Classical policies

The equilibrium rate of unemployment at any real wage, is the difference between ______ and ______?

Options

A : those willing to work at the going wage labour demand

B : labour demand those willing to work at the going wage

C : labor demand, labor supply

D : those willing to work at the going wage labor supply

A person who is made redundant because of the contraction of an industry is a victim of ?

Options

A : frictional unemployment

B : demand-deficient unemployment

C : classical unemployment

D : structural unemployment

The Short run Phillips curve can shift in response to changes in ?

Options

A : Inflationary expectations

B : unemployment

C : the inflation rates

D : wage rates

The Phillips curve shows the trade-off between _____ and _____?

Options

A : the inflation rate, interest rates

B : the inflation rate, the unemployment rate

C : interest rates, output

D : output, employment

During Periods of rising inflation and rising interest rates we expect the demand for real cash to ?

Options

A : rise

B : fall

C : not changes

D : fluctuates

The quantity theory of money says that changes in ____lead to equivalent changes in ____ but have no effect on ______?

Options

A : prices, wages, output and employment

B : output prices, employment

C : nominal money, the price level, output and employment

D : nominal money output prices

Expansionary fiscal policy in the classical model will cause aggregate demand to _______ potential output?

Options

A : exceeds

B : fall below

C : fluctuate around

D : remain equal to

At the intersection of AD and AS equilibrium is achieved in ?

Options

A : the goods market

B : the money markets

C : the labor markets

D : all of these

In the classical model, potential output cannot be increased by ?

Options

A : monetary growth

B : better technology

C : more capital

D : higher labor supply

The AD schedule indicates that _______ inflation is associated with ________ output?

Options

A : higher, lower

B : higher, higher

C : lower, lower

D : zero, zero

All the following are types of monetary policy expect ?

Options

A : a nominal money stock target

B : a balanced budget

C : an inflation target

D : The pursuit of a target real interest rate

The relative-wage explanation for the existence of downwardly sticky wages emphasizes ?

Options

A : the contention that workers in one industry may be unwilling to accept a wage cut unless they know that workers in other industries are receiving simi

B : employment contracts that stipulate workers’ wages usually for a period of one to three years

C : unspoken agreements between workers and firms that firms will not cut wages

D : the incentive that firms may have to hold wages above the market clearing rate

When economists use the term real business cycle theory they are suggesting that business cycles are caused by ?

Options

A : Shifts in aggregate supply

B : changes in export demand due to the state of the world economy

C : business confidence

D : business expectations

Doubts about the natural and the existences of the Phillips curve arose in the 1970s when the economy experienced ?

Options

A : a high rate of inflation: along with a low rate of unemployment

B : simultaneously low rates of inflation and unemployment

C : simultaneously high rates of inflation and unemployment

D : a high rate of unemployment along with a low rate of inflation

If input price prices adjusted very rapidly to output prices as classical economists argue the Philips curve would be ?

Options

A : Vertical or nearly vertical

B : upward sloping

C : downward sloping

D : horizontal or nearly horizontal

The Phillips curve indicates that there is a ?

Options

A : negative relationship between the inflation rate and labor demand

B : positive relationship between labor supply and the inflation rate

C : positive relationship between the inflation rate and the employment

D : negative relationship between the inflation rate and the unemployment rate

Potential GDP is the level of aggregate output ?

Options

A : that can be produced if structural unemployment is zero

B : that can be produced at a zero-unemployment rate

C : that can be sustained in the long run without inflation

D : that can be sustained in the long run, if the inflation rate is zero

In the long run, the Phillips curve will be vertical at the natural rate of unemployment if ?

Options

A : the long-run aggregate demand curve is horizontal at the natural rate of inflation

B : the long run aggregate demand curve is vertical at potential GDP

C : the long run aggregate demand curve is vertical at potential GDP

D : The long run supply curve is horizontal at the natural rate of inflation

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