Enter your answer to each of the questions in the blank to the left of the question. Be sure to use lowercase letters only!
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1. The short-run aggregate supply curve is:
a. upward-sloping.
b. vertical.
c. horizontal.
d. fixed at the origin.
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2. The long-run aggregate supply curve is:
a. upward-sloping.
b. vertical.
c. horizontal.
d. fixed at the origin.
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3. The output that would be produced at the nonaccelerating inflation rate of unemployment (NAIRU) is called:
a. aggregate supply.
b. potential GDP.
c. nonaccelerating GDP.
d. none of the above.
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4. Economists that believe that changes in aggregate demand have a significant and lasting effect on output are:
a. classical economists.
b. neoclassical economists.
c. in the Keynesian school of economics.
d. none of the above.
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5. 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 is called:
a. classical.
b. market.
c. Keynesian.
d. none of the above.
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6. In the short run, aggregate supply will differ from potential output because:
a. the NAIRU does not exist.
b. prices always fall during recessions.
c. of inflexible elements of costs.
d. none of the above.
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7. People who perform any paid work, as well as those who have jobs but are absent from work because of illness, strikes, or vacations are called:
a. not in the labor force.
b. unemployed.
c. employed.
d. the labor force.
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8. People who are not employed but are actively looking for work or waiting to return to work are called:
a. not in the labor force.
b. unemployed.
c. employed.
d. the labor force.
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9. People who are keeping house, retired, too ill to work, or simply not looking for work are:
a. not in the labor force.
b. unemployed.
c. employed.
d. the labor force.
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10. All those who are employed or unemployed are called:
a. not in the labor force.
b. unemployed.
c. employed.
d. the labor force.
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11. The number of unemployed divided by the total labor force is called:
a. the employment rate.
b. the unemployment rate.
c. the labor force.
d. none of the above.
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12. Okun's Law states that:
a. for every 3 percent that GDP falls relative to potential GDP, the unemployment rate rises about 1 percentage point.
b. for every 1 percent that GDP falls relative to potential GDP, the unemployment rate rises about 1 percentage point.
c. for every 2 percent that GDP rises relative to potential GDP, the unemployment rate rises about 1 percentage point.
d. for every 2 percent that GDP falls relative to potential GDP, the unemployment rate rises about 1 percentage point.
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13. Which of the following arises because of the incessant movement of people between regions and jobs or through different stages of the life cycle?
a. frictional unemployment
b. structural unemployment
c. cyclical unemployment
d. none of the above
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14. Which of the following exists when the overall demand for labor is low?
a. frictional unemployment
b. structural unemployment
c. cyclical unemployment
d. none of the above
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15. Which of the following signifies a mismatch between the supply of and the demand for workers?
a. frictional unemployment
b. structural unemployment
c. cyclical unemployment
d. none of the above
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