Macroeconomics

1) Suppose economists were able to measure frictional unemployment as 3%, cyclical unemployment as 2%, and
structural unemployment as 4%. Then we would know that the NAIRU is and the actual unemployment rate is
.
A) 7%; 7%
B) 5%; 9%
C) 6%; 5%
D) 7%; 9%
E) 6%; 6%
2) Increases in nominal wages in the economy are generally caused by which force(s)?
A) supply-shock inflation
B) expectational effect
C) output gap effect plus expectational effect minus supply-shock inflation
D) output-gap effect
E) output gap effect plus expectational effect
3) In the basic AD/AS macro model, actual inflation is the sum of three separate components. They are
A) output gap inflation, wage-push inflation and demand inflation.
B) accelerated inflation, demand inflation and supply inflation.
C) validated inflation, expected inflation, and output gap inflation.
D) accelerated inflation, expected inflation and output gap inflation.
E) output gap inflation, expected inflation and supply-shock inflation.
4) Assume your salary is $2000 per month and your employer gives you a raise of 6%. Over the next twelve months the
inflation rate is 12%. Your real salary will change by
A) – 12%.
B) +12%.
C) + 6%.
D) 0%.
E) – 6%.
5) A constant inflation rate can be illustrated by the AD curve shifting upward
A) faster than aggregate supply shifts upward.
B) faster than aggregate supply shifts downward.
C) with no shifts in aggregate supply.
D) at the same rate as aggregate supply shifts downward.
E) at the same rate as aggregate supply shifts upward.
6) A rightward shift in the AD curve accompanied by a leftward shift of the AS curve will result in
A) a reduction in unemployment and an uncertain effect on the price level.
B) a reduction in the price level and an uncertain effect on unemployment.
C) an increase in unemployment and an uncertain effect on the price level.
D) an increase the price level and an uncertain effect on unemployment.
E) a reduction in both unemployment and the price level.
7) Suppose the economy is currently in long-run equilibrium with real GDP equal to potential GDP. A positive demand
shock, that is not validated by the Bank of Canada, will eventually result in
A) an ongoing deflation in the economy.
B) no change in the price level.
C) an ongoing inflation in the economy.
D) a higher price level and GDP at potential output.
E) a lower price level and real GDP below potential output.