Economics MCQs

Page No. 144

The Keynesian model is a good guide to ____ behavior and the classical model describes behavior in ______?


a long run, short run


bflexible imperfect markets


c short-term long run


dlong run, imperfect markets



The equilibrium inflation rate is determined by the intersection of _____ and _____?


a demand, supply


bIS, LM


cAD, AS


d Labor demand, labor supply


View Answer AD, AS

If a person thinks they are better off after a 10% wage increase, and all prices have risen 10% then they are experiencing ?


ainflation


b a supply shock


ccrowding out


dinflation illusion


View Answer inflation illusion

The classical model of macroeconomics assumes ?


a wages and prices are sticky


bwages and prices are flexible


cB and D


d the economy is always at full capacity


View Answer B and D

Even though explicit contracts may lead to layoffs during recessions explicit contracts may still be efficient because such contracts ?


aminimize negotiation costs


bminimize unemployment effects


cguarantee that only the least productive workers will be laid off.


dwill equitable spread the layoffs among junior and senior workers



An unspoken agreement between workers and firms that the firm will not cut wages is known as ?


a an implicit or social contract


ba relative-wage contract


c employment at will


dan explicit contract



The expectations augmented Phillips curve was the Work of which group of economists ?


aNew classical economists


bKeynesian


cMonetarists


dMarxists


View Answer Monetarists

The view of the Phillips curve that prevailed in the 1960s implied that policies that ?


a lower unemployment rate will tend to lower the inflation rate


b lower unemployment rate will tend to raise the inflation rate


craise inflation rate will tend to raise the unemployment rate


dlower inflation rate will tend to raise the unemployment rate



The Phillips curve is a graph showing the relationship between ?


athe price level and the unemployment rate


bthe inflation rate and the unemployment rate


cthe level of aggregate output and the price level


dthe inflation rate and the level of aggregate demand



Which school of economic thought suggested that one possible cause of inflation was a ‘push’ from the cost side ?


aNew classical economists


bKeynesian


cMarxists


dMonetarists


View Answer Keynesian

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