aggregate supply unemployment and inflation MCQs – Page 2

Practise focused aggregate supply unemployment and inflation questions with marked answers for exam preparation and subject revision.

aggregate supply unemployment and inflation Mcqs
21. We would normally expect the size of the labor force to be _____ than the number or workers willing to accepts job offers at any real wage rate ?
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A. Larger

B. the same size

C. Smaller

D. None of these

22. If a person thinks they are better off after a 10% wage increase, and all prices have risen 10% then they are experiencing ?
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A. inflation illusion

B. crowding out

C. a supply shock

D. inflation

23. At the intersection of AD and AS equilibrium is achieved in ?
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A. the goods market

B. the money markets

C. all of these

D. the labor markets

24. Even though explicit contracts may lead to layoffs during recessions explicit contracts may still be efficient because such contracts ?
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A. will equitable spread the layoffs among junior and senior workers

B. minimize negotiation costs

C. minimize unemployment effects

D. guarantee that only the least productive workers will be laid off.

25. Possible causes of involuntary unemployment are ?
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A. insider-outsider distinctions

B. trade

C. efficiency wages

D. all of the above

E. minimum wage agreements

F. scale economies

26. All the following are types of monetary policy expect ?
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A. The pursuit of a target real interest rate

B. a balanced budget

C. a nominal money stock target

D. an inflation target

27. The equilibrium rate of unemployment at any real wage, is the difference between ______ and ______?
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A. labor demand, labor supply

B. those willing to work at the going wage labor supply

C. those willing to work at the going wage labour demand

D. labour demand those willing to work at the going wage

28. The Short run Phillips curve can shift in response to changes in ?
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A. wage rates

B. unemployment

C. the inflation rates

D. Inflationary expectations
29. A person who is made redundant because of the contraction of an industry is a victim of ?
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A. structural unemployment

B. demand-deficient unemployment

C. classical unemployment

D. frictional unemployment

30. The expectations augmented Phillips curve was the Work of which group of economists ?
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A. Monetarists

B. Keynesian.

C. New classical economists

D. Marxists.

31. In the classical model, potential output cannot be increased by ?
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A. better technology

B. higher labor supply

C. more capital

D. monetary growth
32. The relative-wage explanation for the existence of downwardly sticky wages emphasizes ?
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A. unspoken agreements between workers and firms that firms will not cut wages

B. 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 similar cuts

C. employment contracts that stipulate workers wages usually for a period of one to three years

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

33. If the income tax rate changes from 30% to 40% on income over Rs30,000 and a persons income is Rs 31,000 then her marginal tax rate is ?
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A. 70%

B. 30%

C. 10%

D. 40%
34. The equilibrium inflation rate is determined by the intersection of _____ and _____?
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A. IS, LM

B. demand, supply

C. AD, AS

D. Labor demand, labor supply

35. The Phillips curve shows the trade-off between _____ and _____?
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A. output, employment

B. interest rates, output

C. the inflation rate, the unemployment rate

D. the inflation rate, interest rates

36. one of the tenets of the classical view of the labor market is that the wage adjustments that are necessary to clear the labor market occur ?
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A. quickly

B. instantly

C. very infrequently

D. slowly

37. Expansionary fiscal policy in the classical model will cause aggregate demand to _______ potential output?
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A. fluctuate around

B. exceeds

C. fall below

D. remain equal to
38. If somebody is prepared to work at the going wage rate but cannot find work then they are victims of ?
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A. voluntary unemployment

B. voluntary unemployment

C. classical unemployment

D. Frictional unemployment

39. If input price prices adjusted very rapidly to output prices as classical economists argue the Philips curve would be ?
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A. downward sloping

B. Vertical or nearly vertical

C. horizontal or nearly horizontal

D. upward sloping

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

B. not changes

C. fall

D. rise