MCQs of Economics – Aggregate Supply, Unemployment And Inflation

one of the tenets of the classical view of the labour market is that the wage adjustments that are necessary to clear the labour market occur:

The classical view of the labour market is basically consistent with the assumption of ____ aggregate supply curve

Those who hold the classical view of the labour market are likely to believe that:

According to the classical economists, those who are not working

The natural rate of unemployment is generally thought to be the sum of:

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

The measured unemployment rate can be pushed below the natural rate, but:

Potential GDP is the level of aggregate output:

Which school of economic thought suggested that one possible cause of inflation was a ‘push’ from the cost side?

The Phillips curve indicates that there is a:

The Phillips curve is a graph showing the relationship between:

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

The view of the Phillips curve that prevailed in the 1960s implied that policies that:

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

If inflationary expectations increase the Phillips curve will

The expectations augmented Phillips curve was the Work of which group of economists?

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

An unspoken agreement between workers and firms that the firm will not cut wages is known as:

The relative-wage explanation for the existence of downwardly sticky wages emphasises:

Even though explicit contracts may lead to layoffs during recessions explicit contracts may still be efficient because such contracts:

All of the following are types of monetary policy expect:

An increase in government spending will stimulate private spending by causing a reduction in interest rates

The classical model of macroeconomics assumes

The AD schedule indicates that ____ inflation is associated with ____ output

In the classical model the AS schedule is vertical

If a person thinks they are better off after a 10% wage increase, and all prices have risen 10% then they are experiencing

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

The equilibrium inflation rate is determined by the intersection of _____ and _____

At the intersection of AD and AS equilibrium is achieved in

Fiscal expansion in the classical model can increase real output

The Keynesian model is a good guide to ____ behaviour and the classical model describes behaviour in ______

Temporary supply shocks alter potential output:

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

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:

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

Monetarists believe that a reduction in _____ can be achieved by reducing _____

Faster nominal money growths leads to either higher inflation or higher nominal interest rates, but not both

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

Governments may contribute to inflationary pressure on account of building up large:

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

Equilibrium unemployment is determined by the underlying rate of inflation

The long-run Phillips curve is ____ at the ____

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

The costs of inflation are

Only an incomes policy can deliver low inflation in the long run

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

An advocate of the classical model of the economy would claim that unemployment is created when the ____ is above its equilibrium level in the ______

The natural rate of unemployment (equilibrium unemployment) will always be zero

We would normally expect the size of the labour force to be _____ than the number or workers willing to accepts job offers at any real wage rate

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

If somebody is prepared to work at the going wage rate but cannot find work then they are victims of:

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

If the income tax rate changes from 30% to 40% on income over Rs30,000 and a person’s income is Rs 31,000 then her marginal tax rate is:

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

Possible causes of involuntary unemployment are

If a worker chooses not to work at the equilibrium wage rate they are involuntarily unemployment