47. The structural deficit/surplus budget a measures the federal budget deficat/

Question

47. The structural deficit/surplus budget a measures the federal budget deficat/surplus as ifthe economy were at full employment b.measures the federal budget defiat/surplus as ifthe economy were in recession c. measures the federal budget defiat/surplus as ifthe economy were suffering from high inflation d is used when structural unemployment is at a peak 48. If the aggregate supply curve shifts outward, then unemployment a. and inflation will both decrease. b. and inflation will both increase. c. will increase and inflation will decrease. d. will decrease and inflation will increase. 49. If expectations are rational, a. a predictable change in inflation can make the expected inflation rate deviate from the actual rate. b unemployment can exceed the full employment rate even in the long run. c the difference between the actual inflation rate and the expected inflation rate must be a purely random number d the inflation rate cannot be reduced without a period ofhigh unemployment because the Phillips curveis downward sloping. 50. When will the difference between the actual deficit and the structural deficit be the largest? a. in an inflationary gap b. at full employment c at potential real GDP d. in a recession

Explanation / Answer

47 a.The structural surplus or deficit is the budget balance that would occur if the economy were at full employment. The real GDP will be equal to potential GDP.

48. a. Both inflation and unemployment will decrease. AS will shift to the right when there is higher productivity.

49. c, The difference between the actual rate of inflation and expected rate of inflation ( the forecasting error) must be a pure random number.

50. d. In a recession.

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