A. wages and prices are sticky
B. wages and prices are flexible
C. the economy may operate below full capacity
D. the economy is always at full capacity
E. A and C
F. B and D
Aggregate Supply, Unemployment And Inflation
If a person thinks they are better off after a 10% wage increase, and all prices have risen 10% then they are experiencing ?
A. inflation
B. a supply shock
C. crowding out
D. inflation illusion
The equilibrium inflation rate is determined by the intersection of ….. and …..?
A. demand, supply
B. IS, LM
C. AD, AS
D. Labor demand, labor supply
The Keynesian model is a good guide to …. behavior and the classical model describes behavior in ……?
A. long run, short run
B. flexible imperfect markets
C. short-term long run
D. long run, imperfect markets
In the events of an increase in the international price of oil that encouraged the central bank to accept lower real interest rates, inflation would most likely ?
A. fall
B. increase
C. remain the same
D. fluctuates
Governments may contribute to inflationary pressure because of building up large ?
A. numbers of employees
B. welfare plans
C. budget deficits
D. expenditures
The long-run Phillips curve is …. at the ….?
A. horizontal, natural rate of inflation
B. horizontal natural rate of unemployment
C. vertical natural rate of inflation
D. vertical equilibrium rate of unemployment
The costs of inflation are ?
A. shoe leather costs
B. menu costs
C. income redistribution
D. uncertainly
E. all of the above
An advocate of the classical model of the economy would claim that unemployment is created when the …. is above its equilibrium level in the ……?
A. price level, aggregate economy
B. tax rate, government budget
C. wage rate, labor market
D. interest rate, market for loanable funds
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 ?
A. Smaller
B. Larger
C. the same size
D. None of these