When the prevailing market wage is above equilibrium:
A. the surplus of labor is the amount of unemployment in the market.
B. the difference between the quantity supplied and the quantity of labor demanded is unemployment.
C. unemployment occurs.
D. All of these are true.
D. All of these are true.
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The economy pictured in the figure has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; A B. recessionary; C C. recessionary; B D. expansionary; A
To fight a recession, an appropriate monetary policy would be that the Fed conducts an open market operation that ________ government securities, ________ the federal funds rate, and ________ aggregate demand
A) buys; lowers; decreases B) sells; lowers; increases C) sells; raises; decreases D) buys; lowers; increases E) sells; raises; increases
If the central bank of a country increases the interest rate, it will: a. weaken the exchange rate
b. decrease the demand for investment spending. c. increase the price level. d. increase the net exports of that country.
Virtually all economists and policy makers agree that, within limits, higher employment is better. If this is true, couldn't the government create more employment by hiring people to dig holes and fill them in again? Is this good economic policy?