Persistent high inflation combined with high unemployment in an economy is known as _____
a. disinflation
b. stagflation
c. hyperinflation
d. demand-pull inflation
b
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The income effect means that at a high enough wage rate labor supply curve has a
A) positive slope because an increase in the wage rate increases income. B) positive slope because an increase in income increases the demand for leisure. C) negative slope because an increase in income increases the demand for leisure. D) negative slope because an increase in the wage rate increases hours worked to earn more income.
As a result of the housing market crash overall output fell, and prices:
A. decreased because the magnitude of shift was larger for aggregate demand than it was for aggregate supply. B. increased because the magnitude of shift was larger for aggregate demand than it was for aggregate supply. C. decreased because the magnitude of shift was smaller for aggregate demand than it was for aggregate supply. D. increased because the magnitude of shift was smaller for aggregate demand than it was for aggregate supply.
A program of protection that results in preserving jobs in certain industries
a. raises average productivity in all sectors of the economy. b. does so at very high cost to consumers of the products from those industries. c. is an efficient way to preserve employment, and is cheaper than other forms of maintaining full employment. d. is an effective way of encouraging innovation and improvement in production.
Figure 33-1
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Which of the following is true about the economy depicted in Figure 33-1?
A. Tax incentives are being used to stimulate aggregate supply. B. Policymakers believe the costs of unemployment are higher than the costs of inflation. C. Contractionary monetary policy is being enacted to fight inflation. D. Prices are rising but real GDP is falling.