1) .When the economy is in equilibrium at a point on the vertical segment of the
ID: 1167151 • Letter: 1
Question
1) .When the economy is in equilibrium at a point on the vertical segment of the aggregate supply curve, an increase in government spending will
a. cause a dramatic increase in national income
b. cause the price level to increase with no change in output
c. close a recessionary gap
d. decrease the budget deficit
e. be followed by an increase in taxes
2) National-income accounting provides:
a. Measures of the profitability of individual firms in the economy.
b. Macroeconomic data on output.
c. Individual household data on incomes.
d. All of the above.
3) Frictional unemployment can be the result of
a. people quitting one job to look for a better
b. a recession
c. friction in the workplace between workers and their employers
d. a decrease in government spending
e. a change in the technology of production one
EC
People who are on fixed incomes are adversely affected by inflation because
a. they typically have large outstanding debts like a mortgage
b. while their income may increase with inflation, it increases at a lower rate than the rate of inflation
c. their incomes buy fewer goods and services
d. the minimum wage that they receive does not increase
e. they are unable to pick cheaper goods and services to buy as they did before the inflation
Explanation / Answer
a) "B"
Cause the price level to increase with no change in the output. At the vertical point, the economy is at the potential output and it can't be increased further.
b) "B"
National income accounting is used by the government to measure the macroeconomic activity in the nation.
c) "A"
People quitting a job in the search of the better job causes frictional unemployment.
d) "C"
Their income buys fewer goods and services because inflation has reduced the purchasing power of income.
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