Potential GDP and the Natural Unemployment Rate

Potential GDP and the NaturalUnemployment Rate 24 CLICKER QUESTIONS

Checkpoint 24.1 Checkpoint 24.2 Question 1 Question 6 Question 7 Question 2 Question 8 Question 3 Question 9 Question 4 Question 5 Question 10

CHECKPOINT 24.1 Question 1 ____ adopts the view that aggregate fluctuations are a natural consequence of an expanding economy. • Classical macroeconomics • Keynesian economics • Monetarist macroeconomics • The Lucas wedge • The Okun gap

CHECKPOINT 24.1 Question 2 Potential GDP ______. • is produced when resources are fully employment • can never be exceeded • can never be attained • is another name for real GDP • is the maximum GDP that the economy can produce

CHECKPOINT 24.1 Question 3 The production function shows that when the economy ________, production equals ______ . • is at full employment; nominal GDP • has no unemployment; real GDP • has no unemployment; potential GDP • is at full employment; potential GDP • has unemployment; nominal GDP

CHECKPOINT 24.1 Question 4 The economy in the figure will produce potential GDP when labor works ____ billions of hours a year. • 150 • 200 • 250 • 300 • more than 150

CHECKPOINT 24.1 Question 5 With fixed quantities of capital, land, and entrepreneurship and given technology, the amount of real GDP produced increases when ____ increases. • the quantity of labor supplied • the inflation rate • the quantity of labor employed • the price level • the real wage rate

CHECKPOINT 24.2 Question 6 The two sources of unemployment at full employment are ______. • seasonal jobs and technological change • foreign competition and financial bankruptcies • job search and job rationing • decreases in labor productivity and retirement benefits • demographic change and decreases in the demand for labor

CHECKPOINT 24.2 Question 7 Union wages and efficiency wages _____ the real wage rate ____ the equilibrium real wage rate and _____. • raise; above; create a shortage of labor • lower; below; create a shortage of labor • raise; above; lower the natural unemployment rate • have no impact on; do not influence the amount of unemployment • raise; above; increase the natural unemployment rate

CHECKPOINT 24.2 Question 8 The more generous the unemployment benefits, the _____. • higher is the opportunity cost of job search • lower is the opportunity cost of job search • shorter is the time spent searching for a suitable job • shorter is the time spent searching for a suitable job and the higher is the opportunity cost of job search • lower is the natural unemployment rate

CHECKPOINT 24.2 Question 9 In the figure, if job rationing occurs, the real wage rate might be ____ per hour with ____ billion hours employed. • $20; 80 • $30; 60 • $20; 50 • $40; 40 • $40; 70

CHECKPOINT 24.2 Question 10 If job rationing is introduced, the unemployment created will be greater if the _______. • real wage rate falls to $10 per hour • real wage rate rises to $40 per hour • employment rises to 200 billion hours • employment falls to 100 billion hours

Potential GDP and the Natural Unemployment Rate