An economy’s full-employment real output will decrease when
(A)price level increases
(B)price level decreases
(C)technological change increases labor productivity
(D)workers choose shorter weeks to enjoy more leisure time
(E)the stock of physical capital is growing at a constant rate
The natural rate of unemployment can be defined as the
(A)unemployment rate consistent with accelerating inflation
(B)unemployment rate of the least-skilled workers
(C)economy’s long-run equilibrium rate of unemployment
(D)labor force participation rate plus the unemployment rate
(E)labor force participation rate minus the unemployment rate
A country’s infrastructure refers to its
(A)natural resources
(B)private financial institutions
(C)proportion of population with postsecondary education
(D)public capital goods such as highways
(E)internal, as opposed to external, debt
When an economy is in equilibrium at potential gross domestic product, the actual unemployment rate is
(A)equal to the cyclical rate
(B)greater than the natural rate
(C)less than the natural rate
(D)equal to the natural rate
(E)equal to zero
Assume that the economy is in long-run equilibrium. A shift in the aggregate demand curve will change
(A)only the price level in the long-run
(B)only the output level in the long-run
(C)both the price level and the output level in the long-run
(D)neither the price level nor the output level in the short-run
(E)only the price level in the short run and only the output level in the long-run
Assume that an economy is currently in long-run equilibrium and the short-run aggregate supply curve is upward
sloping. An adverse supply shock, such as a drought, will most likely cause which of the following to the economy in the
short-run?
(A)A decrease in the price level and a decrease in the nominal wage
(B)A decrease in the price level and an increase in the nominal wage
(C)An increase in the price level and an increase in the nominal wage
(D)An increase in the price level and an increase in the real wage
(E)An increase in the price level and a decrease in the real wage
The graph above shows the macroeconomic conditions of Wattsonia. Many economists estimate that the natural rate of
unemployment is 6 percent. If this is true and the current rate of unemployment is 5.1 percent, in what range of real
gross domestic product is the economy currently producing?
(A)Less than Y1
(B)At Y1
(C)At Y2
(D)Greater than Y1 and less than Y2
(E)Greater than Y2
A leftward shift of the long-run aggregate supply curve could create an improvement in a country’s standard of living if
(A)prices fall
(B)depreciation increases
(C)population decreases
(D)taxes decrease
(E)imports decline