11) According to Okun\'s law, an increase in which of the following is associate

Question

11) According to Okun's law, an increase in which of the following is associated with an increase in unemployment?

A) inflation

B) output

C) expected inflation

D) autonomous expenditure

E) potential output

12) In the AD-AS framework, long-run equilibrium implies that ________.

A) quantity demanded equals quantity supplied at a moderate level of equilibrium inflation

B) quantity demanded equals quantity supplied at a point consistent with the short-run equilibrium level of inflation

C) quantity demanded equals quantity supplied at a point consistent with the natural rate of unemployment

D) all of the above

E) none of the above

13) Picture an economy that is in general equilibrium. What would happen if the natural rate of unemployment were to experience an increase?

A) according to the Phillips curve, the ensuing negative unemployment gap would exert inflationary pressures

B) according to Okun's Law, the ensuing negative unemployment gap would be consistent with a positive output gap

C) according to the AD-AS framework, the LRAS curve would shift to the left and the ensuing positive output gap would be closed by subsequent leftward shifts in the AS curve to higher equilibrium levels of inflation

D) all of the above

Explanation / Answer

11) According to Okun's law, an increase in which of the following is associated with an increase in unemployment?

A) inflation

B) output

C) expected inflation

D) autonomous expenditure

E) potential output

12) In the AD-AS framework, long-run equilibrium implies that ________.

A) quantity demanded equals quantity supplied at a moderate level of equilibrium inflation

B) quantity demanded equals quantity supplied at a point consistent with the short-run equilibrium level of inflation

C) quantity demanded equals quantity supplied at a point consistent with the natural rate of unemployment

D) all of the above

E) none of the above

13) Picture an economy that is in general equilibrium. What would happen if the natural rate of unemployment were to experience an increase?

A) according to the Phillips curve, the ensuing negative unemployment gap would exert inflationary pressures

B) according to Okun's Law, the ensuing negative unemployment gap would be consistent with a positive output gap

C) according to the AD-AS framework, the LRAS curve would shift to the left and the ensuing positive output gap would be closed by subsequent leftward shifts in the AS curve to higher equilibrium levels of inflation

D) all of the above

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