Multiple Choice
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This is just for practive, not for a grade.
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1.
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The
real wage represents the A) | quantity of goods and services a worker can purchase in
exchange for work time | B) | dollar value of the goods and services a worker can purchase in
exchange for working | C) | nominal wage minus taxes paid on
wages | D) | actual amount of income a worker receives after deductions for
such things as taxes, insurance, and the like | E) | nominal wage
times the price level | | |
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2.
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When
the economy is at its potential output level, which of the following is not
true? A) | Firms' and
workers' expectations about the price level are realized. | B) | The nominal wage
is a good measure of the expected real wage. | C) | The unemployment
rate is about 4 to 6 percent. | D) | The economy is producing its maximum sustainable
output. | E) | The actual price level is greater than the expected price
level. | | |
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3.
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In
the long run, but not in the short run, A) | cyclical unemployment can exist | B) | structural
unemployment can exist | C) | frictional unemployment can exist | D) | the actual rate
of unemployment equals the natural rate of unemployment | E) | actual output
can exceed potential output | | |
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4.
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The
expected price level is held constant along a given short-run aggregate supply
curve.
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5.
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If
the economy is experiencing an expansionary gap, which of the following will occur in the long
run? A) | Workers will
negotiate nominal wage increases that will shift the SRAS curve to the
left. | B) | Workers will negotiate nominal wage increases that will shift
the SRAS curve to the right. | C) | Employers will negotiate lower nominal wages (relative to
prices) that will shift the SRAS curve to the right. | D) | Employers will
negotiate lower nominal wages (relative to prices) that will shift the SRAS curve to the
left. | E) | Aggregate demand will fall because workers' incomes are
rising. | | |
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6.
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The
various output levels produced at different price levels is reflected in the A) | aggregate supply
curve | B) | aggregate demand curve | C) | labor demand
curve | D) | labor supply curve | E) | production
possibilities frontier | | |
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7.
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The
graph in Exhibit 0040 shows a(n) A) | increase in short-run aggregate
supply | B) | increase in long-run aggregate supply | C) | decrease in
short-run aggregate supply | D) | decrease in long-run aggregate supply | E) | increase in
aggregate quantity demanded | | |
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8.
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If
wages are flexible, the long-run aggregate supply curve is vertical.
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9.
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The
long-run aggregate supply curve is vertical because potential real GDP is determined by resource
availabilities and productivities.
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10.
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Stagflation is defined as A) | decreased output accompanied by a higher price
level | B) | decreased output accompanied by a lower price
level | C) | increased output accompanied by a lower price
level | D) | increased output accompanied by a higher price
level | E) | stagnation in the rate of inflation (i.e., no appreciable
change in the rate of inflation for a year or more) | | |
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