Question : 1) Suppose the Canadian economy facing an inflationary output gap : 1384477

1) Suppose the Canadian economy is facing an inflationary output gap (Y > Y*). In our macro model, such an output gap can explain changes in which of the following variables?

A) the average level of wages

B) the level of wages in the forestry sector relative to the mining sector

C) the level of wages in a high-growth region of the country relative to a slow-growth region

D) the level of wages for skilled workers relative to unskilled workers

E) the level of wages for female workers relative to male workers

2) The term NAIRU stands for the

A) non-accelerating inflation rate of unemployment.

B) natural and indexed rate of unemployment.

C) non-accelerating, indexed and regulated unemployment.

D) North American indexed rate of unemployment.

E) North American inflation rate of unemployment.

3) Suppose economists were able to measure frictional unemployment as 3%, cyclical unemployment as 2%, and structural unemployment as 4%. Then we would know that the NAIRU is ________ and the actual unemployment rate is ________.

A) 6%; 5%

B) 5%; 9%

C) 7%; 9%

D) 7%; 7%

E) 6%; 6%

4) If the unemployment rate is greater than the NAIRU,

A) there will be upward pressure on wages.

B) the AS curve will shift upward.

C) there is a negative output gap.

D) real national income is above potential GDP.

E) there is an inflationary gap.

5) Suppose economists were able to measure frictional unemployment as 3%, cyclical unemployment as 2%, and structural unemployment as 4%. Then we would know that

A) Y is below Y* and there is downward pressure on wages.

B) Y is below Y* and there is upward pressure on wages.

C) Y is equal to Y* and there is no pressure on wages.

D) Y is above Y* and there is downward pressure on wages.

E) Y is above Y* and there is upward pressure on wages.

6) If the unemployment rate is less than the NAIRU,

A) there is no pressure on the AS curve to shift.

B) there is a recessionary output gap.

C) demand forces will exert upward pressure on wages.

D) the AS curve will shift downward.

E) there will be downward pressure on wages.

7) Inflationary pressures that result from a rightward shift in the AD curve

A) cause Y to fall below Y*.

B) will worsen any existing unemployment problem.

C) will initiate a wage-price spiral.

D) will eventually subside unless accompanied by continual increases in the money supply.

E) will permanently increase output.

8) Other things being equal, unit costs will rise and the AS curve will shift upward if

A) there is a fall in the price of oil.

B) the government reduces payroll taxes.

C) wage increases exceed productivity increases.

D) wages rise.

E) wage and price controls are in effect.

9) If the NAIRU is 8% and the actual unemployment rate is 5%,

A) there is no pressure on the AS curve to shift.

B) there is a recessionary gap.

C) demand forces put upward pressure on wages.

D) the AS curve will shift downward.

E) it will get stuck there permanently.

10) Suppose the NAIRU for Canada is 6%, the actual unemployment rate is 7%, and productivity is constant. We can conclude that

A) there is an inflationary gap.

B) the NAIRU will readjust to 7%.

C) the AD curve will automatically shift up.

D) the excess demand for labour will put upward pressure on wages.

E) the excess supply of labour will put downward pressure on wages.