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Unit 5 AP Macro - Labor Unemployment and Inflation (Chapters 32 and 33) Flashcards | StudBud
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Unit 5 AP Macro - Labor Unemployment and Inflation (Chapters 32 and 33)
Unit 5 AP Macro - Labor Unemployment and Inflation (Chapters 32 and 33)
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Inflation, unemployment and labor markets
Flashcards
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Questions
21
Answers
1
NAIRU is all of the following EXCEPT:
Unemployment rate where inflation doesn't change over time
The nonaccelerating inflation rate of unemployment
Equal to the natural rate of unemployment
The inverse relationship between unemployment and inflation
2
What is the reduction in aggregate demand caused by deflation, intensifying an econ. downturn?
Phillips curve
Recessionary gap
Fisher effect
Debt deflation
3
What do we call wages that are set ABOVE the minimum wage as incentive for better performance?
Structural wages
Efficiency wages
Output gap
Inflationary expectations
4
When expected inflation raises the nominal interest rate one-for-one, we call this:
Debt deflation
Phillips curve
Hyperinflation
Fisher effect
5
What do we call unemployment due to time spent in a job search?
Cyclical unemployment
IDK ... Lol.
Structural unemployment
Frictional unemployment
6
Name that graph!
Links between inflation and unemployment
Crowding out effects on loanable funds
Encouraging savings in the loanable funds market
Loanable funds market
7
This is the negative short-run relationship between the unemployment rate and inflation rate
Inflationary gap
Sticky wages
Lorenz curve
Phillips curve
8
A vicious circle of a shrinking real money supply and a rising rate of inflation leads to:
Hyperinflation
Inflationary gap
Stagflation
Sticky wages
9
Name that graph!
Usual tradeoff between unemployment and inflation
Phillips curve with increased prices and higher unemployment
No tradeoffs in inflation and unemployment in the long-run
Crowding out effects on loanable funds
10
In a loanable funds market, when government borrows money, this shifts demand, creating a(n):
Additional shoe leather and menu costs
Crowding out effect
Inflationary gap
Liquidity trap
11
According to Okun's law, each additional % point of output gap reduces the unemployment rate by
At least one percentage point
1 percentage point
It does not affect the unemployment rate
Less than one percentage point
12
Name that graph!
Loanable funds market showing crowding out
Increase in supply of loanable funds
Phillips curve with increased prices and higher unemployment
Loanable funds market
13
What examines the market demand for funds by borrowers and supply of funds by lenders
Equilibrium market
Liquidity trap
Money market
Loanable funds market
14
Long-run Phillips curve shows NO tradeoff between unemployment and inflation, which looks like
Downward sloping curve
Vertical line
Upward sloping curve
Horizontal line
15
What do we call a positive output gap (% difference between real GDP and potential output):
Recessionary gap
Frictional gap
Structural gap
Inflationary gap
16
What do we call the difference between the actual level of real GDP and potential output?
Inflationary gap
Short-run gap
Output gap
Recessionary gap
17
This type of inflation is caused by an increase in overall level of demand in the economy
SRAS shifting left
Stagflation
Cost-push
Demand-pull
18
The reduction in the real value of money held by the public caused by inflation is known as:
Real inflation
Inflation tax
Inflationary spending
Inflationary gap
19
What do we call a situation in which monetary policy can't be used?
Recessionary gap
Fisher effect
Liquidity trap
Debt deflation
20
When inflation is higher than expected, who benefits from this? Who does it hurt?
Lenders; borrowers
Borrowers; lenders
Borrowers; investors
Lenders; investors
21
All of the following are reasons why wages adjust slowly, EXCEPT:
Sticky wages
Menu costs
Misperceptions about the equilibrium wage rate
Unemployment laws
