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

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bflexible imperfect markets

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c short-term long run

✓


dlong run, imperfect markets

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


a demand, supply

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bIS, LM

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cAD, AS

✓


d Labor demand, labor supply

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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

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b a supply shock

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ccrowding out

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dinflation illusion

✓


View Answer inflation illusion

The classical model of macroeconomics assumes ?


a wages and prices are sticky

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bwages and prices are flexible

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cB and D

✓


d the economy is always at full capacity

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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

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

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dwill equitable spread the layoffs among junior and senior workers

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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

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c employment at will

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dan explicit contract

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


aNew classical economists

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bKeynesian

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cMonetarists

✓


dMarxists

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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

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b lower unemployment rate will tend to raise the inflation rate

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craise inflation rate will tend to raise the unemployment rate

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dlower inflation rate will tend to raise the unemployment rate

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The Phillips curve is a graph showing the relationship between ?


athe price level and the unemployment rate

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bthe inflation rate and the unemployment rate

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cthe level of aggregate output and the price level

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dthe inflation rate and the level of aggregate demand

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


aNew classical economists

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bKeynesian

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cMarxists

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dMonetarists

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View Answer Keynesian

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