Question : 41) Suppose potential GDP $100 billion and the natural unemployment : 1240619

41) Suppose potential GDP is $100 billion and the natural unemployment rate is 5 percent. If the unemployment rate is 6 percent, then according to Okun’s Law real GDP is

A) $98 billion.

B) $101 billion.

C) $99 billion.

D) $102 billion.

E) $100 billion.

42) If the price level is 100 in one year and rises to 102 the next year, then the inflation rate is

A) 2.0 percent.

B) 0.02 percent.

C) 102 percent.

D) 100 percent.

E) unable to be determined without knowing potential GDP.

43) If the price level rises from 100 to 110 then the inflation rate is

A) 1.0 percent.

B) 10.0 percent.

C) 100 percent.

D) 110 percent.

E) None of the above answers is correct.

44) When the aggregate demand curve shifts,

A) the short-run Phillips curve shifts.

B) there is a movement along the short-run Phillips curve.

C) there is a change in potential GDP.

D) there is a change in the natural unemployment rate.

E) the inflation rate does not change.

45) A rightward shift of the aggregate demand curve leads to

A) a leftward shift of the short-run Phillips curve.

B) a rightward shift of the short-run Phillips curve.

C) an upward movement along the short-run Phillips curve.

D) a downward movement along the short-run Phillips curve.

E) neither a movement along nor a shift in the short-run Phillips curve.

46) When the aggregate demand curve shifts rightward, the price level ________ and the unemployment rate ________.

A) increases; increases

B) increases; decreases

C) decreases; decreases

D) decreases; increases

E) does not change; does not change

47) An increase in aggregate demand results in

A) a higher unemployment rate and a lower price level.

B) a lower unemployment rate and a higher price level.

C) an increase in real GDP and a decrease in the price level.

D) a decrease in real GDP and a decrease in the price level.

E) a lower unemployment rate and a lower price level.

48) If aggregate demand decreases, the

A) short-run Phillips curve shifts rightward.

B) short-run Phillips curve shifts leftward.

C) economy moves to a higher inflation rate along its short-run Phillips curve.

D) economy moves to a lower inflation rate along its short-run Phillips curve.

E) short-run Phillips curve does not shift nor is there a movement along it.

49) When an economy experiences a recession there is

A) a leftward shift of the short-run Phillips curve.

B) a rightward shift of the short-run Phillips curve.

C) an upward movement along the short-run Phillips curve.

D) a downward movement along the short-run Phillips curve.

E) no change in the short-run Phillips curve.

50) In the short run, a decrease in aggregate demand will lead to

A) a decrease in the price level and an increase in real GDP.

B) an increase in the price level and a decrease in real GDP.

C) a decrease in the price level and an increase in the unemployment rate.

D) an increase in the price level and an increase in real GDP.

E) no change in the price level and a decrease in real GDP.