One tenet of the classical view of the labour market is that the wage changes needed to clear it happen how?
Correct answer B. Quickly
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Aggregate Supply, Unemployment And Inflation MCQs
Aggregate Supply, Unemployment And Inflation MCQs cover how total output, joblessness and the price level interact in the macroeconomy, including the AS-AD model and the Phillips curve. They help economics students, CSS and PMS aspirants and lecturer test candidates. Every question shows its answer instantly, so you can test your understanding of each model straight away.
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People who hold the classical view of the labour market are likely to believe what about policy?
Correct answer C. Neither monetary nor fiscal policy will have an effect on output and employment
The natural rate of unemployment is generally taken to be the sum of which two types of unemployment?
Correct answer A. Frictional unemployment and structural unemployment
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Measured unemployment can be pushed below the natural rate, but under what condition?
Correct answer D. Only in the short run, and not without inflation
Which school of economic thought suggested that inflation could be caused by a push from the cost side?
Correct answer B. Keynesians
What relationship does the Phillips curve graph show?
Correct answer B. The inflation rate and the unemployment rate
What did the view of the Phillips curve common in the 1960s imply about policies?
Correct answer C. Lower unemployment rate will tend to raise the inflation rate
Which group of economists developed the expectations-augmented Phillips curve?
Correct answer D. Monetarists
What is an unspoken agreement between workers and a firm that wages will not be cut called?
Correct answer D. An implicit or social contract
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Explicit contracts may lead to layoffs in recessions, yet they can still be efficient. Why?
Correct answer B. Minimize negotiation costs
A person feels better off after a 10% pay rise even though all prices have also risen by 10%. What are they experiencing?
Correct answer A. Inflation illusion
Which two schedules intersect to determine the equilibrium inflation rate?
Correct answer B. AD, AS
The Keynesian model is a good guide to behaviour over which period, while the classical model describes behaviour over which?
Correct answer B. Short term, long run
If a rise in world oil prices led the central bank to accept lower real interest rates, what would most likely happen to inflation?
Correct answer D. Increase
By building up large amounts of what can governments add to inflationary pressure?
Correct answer A. Budget deficits
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What shape is the long-run Phillips curve, and at what level does it sit?
Correct answer C. Vertical, equilibrium rate of unemployment
What are the costs of inflation?
Correct answer E. All of the above
A supporter of the classical model would say unemployment arises when which price is above its equilibrium level in which market?
Correct answer B. Wage rate, labour market
At any real wage, how would we normally expect the labour force to compare with the number of workers willing to accept job offers?
Correct answer B. Larger
If someone is willing to work at the going wage but cannot find a job, what type of unemployment are they suffering?
Correct answer D. Involuntary unemployment
About Aggregate Supply, Unemployment And Inflation MCQs
This topic brings together the supply side of macroeconomics. Questions compare the classical view of the labour market, with flexible wages and a vertical aggregate supply curve, against Keynesian ideas of sticky wages and explicit contracts. You will also find items on equilibrium at the intersection of aggregate demand and aggregate supply, the effect of expansionary fiscal policy in the classical model, the short-run Phillips curve and what shifts it, and the tools of monetary policy. These concepts are central to macroeconomics papers in civil service exams and economics lecturer tests.
Exams that include Aggregate Supply, Unemployment And Inflation MCQs
Pakistan
- CSS
- PMS
- PPSC Lecturer tests
- FPSC
- Banking job tests
India
- UPSC CSE
- UGC NET
- IBPS PO
- State PSC exams
Bangladesh
- BCS
- Bangladesh Bank recruitment
- Bank job exams
Frequently asked questions
What does the Phillips curve show?
The Phillips curve shows the relationship between inflation and unemployment. In the short run it slopes downwards, suggesting lower unemployment comes with higher inflation. In the long run, once expectations adjust, the curve is often treated as vertical at the natural rate of unemployment, so policy cannot permanently trade higher inflation for lower unemployment.
Why is the classical aggregate supply curve vertical?
In the classical model, wages and prices adjust fully and quickly, so the labour market always clears and output stays at its potential level. Changes in aggregate demand therefore alter only the price level, not real output, which is why the classical aggregate supply curve is drawn as a vertical line.
How many Aggregate Supply, Unemployment and Inflation MCQs are on MCQs360?
MCQs360 has 45 MCQs on aggregate supply, unemployment and inflation. They are free to practise without sign-up, and each one shows the correct answer instantly, making it easy to revise the AS-AD model and Phillips curve before an economics paper.
Last reviewed October 2026