When the rate of cyclical unemployment is zero, the:
A. natural rate of unemployment must also be zero.
B. rate of frictional unemployment must be negative.
C. economy must have entered a recessionary stage.
D. economy is considered to be at full employment.
Answer: D
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Use the following figures to answer the next question.
A decline in aggregate expenditures from AE2 to AE1 resulting from the real-balances, interest-rate, and foreign purchases effects would be depicted as a ________.
A. shift of aggregate demand from AD2 to AD1 B. shift of aggregate demand from AD1 to AD2 C. movement from A to C along aggregate demand curve AD1 D. movement from C to A along aggregate demand curve AD1
The accompanying figure shows Avery's weekly production possibilities curve for scarves. 
Avery's PPC would shift outward if she:
A. devotes less time to knitting each week. B. knits fewer red scarves and more blue scarves each week. C. devotes more time to knitting each week. D. knits more red scarves and fewer blue scarves each week.
The economic surplus of an action is:
A. the benefit gained by taking an action. B. the money a person has left over after taking an action. C. the difference between the explicit and implicit costs of taking an action. D. the difference between the benefit and the cost of taking an action.
Cost-push inflation occurs when there is ________________.
Fill in the blank(s) with the appropriate word(s).