1. Frictional unemployment might be _______.
good since that means people may be seeking jobs that match their job skills
good because people learn how other folks live
bad because people are not getting a paycheck
bad because people are out of work
2. Deviations from the natural rate of unemployment are known as ______.
3. When the output gap is negative the actual unemployment rate is ______.
above the natural rate
below the natural rate
equal to the natural rate
the actual and natural unemployment rates are not related to the output gap
4. Wages may be sticky in the short run due to _______.
so few workers being unionized
firms wanting to make a profit at the expense of employees
some wages being governed by long term contracts
5. If workers expect a lower rate of inflation, the short run Phillips curve will ______.
remain constant, but there will be a movement down the curve
6. Which of the following would be the BEST explanation for an upward sloping short run aggregate supply curve?
Prices are perfectly flexible.
Wages are perfectly flexible.
Wages and prices of some goods are sticky in the short run.
Wages and prices of some goods are flexible in the short run but sticky in the long run.
7. In the long run, any given percentage increase in the money supply ______.
decreases real GDP
leads to an equal percentage increase in the overall price level
increases real GDP
leads to an equal percentage decrease in the unemployment rate
8. Seigniorage refers to the ______.
problems faced by Social Security as the population ages
government s right to print money
problems senior citizens face in retirement
problems created when the government prints too much money
9. Unexpected inflation _______.
affects everyone the same
affects only consumers
affects only business firms
helps some people but hurts others
10. If the economy is in a liquidity trap _______.
both monetary and fiscal policies are effective
neither monetary nor fiscal policy is effective
monetary policy is effective, but fiscal policy is not
fiscal policy is effective, but monetary policy is not