Chapter 31 Post Quiz
Unemployment and the Foundations of Aggregate Supply

Matching Questions:

Match the terms on the left with the definition in the column on the right. Enter the lowercase letter of that definition in the box to the left of the question number.

	1. Short-run aggregate supply curve	a. vertical.
	2. Long-run aggregate supply curve	b. will cause aggregate supply to differ from potential output in the short run.
	3. Potential GDP	c. upward-sloping.
	4. Keynesian school	d. People who perform any paid work, as well as those who have jobs but are absent from work because of illness, strikes, or vacations.
	5. Classical school	e. Economists that believe that changes in aggregate demand have a significant and lasting effect on output.
	6. Inflexible elements of costs	f. All those who are employed or unemployed.
	7. Employed	g. the output that would be produced at the nonaccelerating inflation rate of unemployment.
	8. Unemployed	h. The number of unemployed divided by the total labor force.
	9. Labor force	i. The school of economics that emphasizes that the price mechanism contains powerful equilibrating forces that will keep the economy near full employment without any government actions.
	10. Unemployment rate	j. People who are not employed but are actively looking for work or waiting to return to work.
	11. Okun's Law	k. states that for every 2 percent that GDP falls relative to potential GDP, the unemployment rate rises about 1 percentage point.
	12. Frictional unemployment	l. exists when the overall demand for labor is low.
	13. Cyclical unemployment	m. arises because of the incessant movement of people between regions and jobs or through different stages of the life cycle.
	14. Structural unemployment	n. signifies a mismatch between the supply of and the demand for workers.