Question : 21) Comparing the AS-AD model and the Phillips curve, we : 1227989

21) Comparing the AS-AD model and the Phillips curve, we see that

A) they both are graphed as a relationship between the rate of inflation and the unemployment rate.

B) the Phillips curve is graphed as a relationship between the price level and the unemployment rate.

C) the AS-AD model is graphed as a relationship between the inflation rate and the rate of real GDP.

D) the AS-AD model uses the price level and the Phillips curve uses the rate of inflation.

E) the AS-AD model uses the price level and the Phillips curve uses real GDP.

22) According to the AS-AD model, when real GDP exceeds potential GDP, the unemployment rate is definitely

A) less than the natural unemployment rate.

B) equal to the natural unemployment rate.

C) greater than the natural unemployment rate.

D) falling.

E) rising.

23) In the short run, if the economy is at full employment then the quantity of real GDP

A) is equal to potential GDP and the unemployment rate is equal to the natural unemployment rate.

B) does not necessarily equal potential GDP but the unemployment rate is equal to the natural unemployment rate.

C) exceeds potential GDP and the unemployment rate is less than the natural unemployment rate.

D) is equal to potential GDP but the unemployment rate is less than the natural unemployment rate.

E) is equal to potential GDP but the unemployment rate does not necessarily equal the natural unemployment rate.

24) If the economy is on its short-run Phillips curve at the natural unemployment rate, then in the AS-AD model, real GDP is definitely

A) less than potential GDP.

B) greater than potential GDP.

C) equal to potential GDP.

D) increasing.

E) decreasing.

25) According to the AS-AD model, when real GDP is less than potential GDP the unemployment rate is definitely

A) less than the natural unemployment rate.

B) equal to the natural unemployment rate.

C) greater than the natural unemployment rate.

D) falling.

E) rising.

26) The short-run tradeoff between the unemployment rate and the inflation rate shown by the Phillips curve is represented in the AS-AD model by

A) the upward-sloping aggregate supply curve.

B) the vertical potential GDP line.

C) the downward-sloping aggregate demand curve.

D) rightward shifts of the aggregate supply curve.

E) leftward shifts of the aggregate supply curve.

27) Moving upward along the aggregate supply curve, is equivalent to

A) moving downward along the short-run Phillips curve.

B) moving upward along the short-run Phillips curve.

C) shifting the short-run Phillips curve rightward.

D) shifting the short-run Phillips curve leftward.

E) shifting the short-run Phillips curve upward.

28) Moving ________ the short-run Phillips curve is equivalent to moving ________.

A) downward along; downward along the aggregate demand curve

B) downward along; upward along the aggregate demand curve

C) upward along; upward along the aggregate supply curve

D) downward along; upward along the potential GDP line

E) downward along; downward along the potential GDP line

29) Okun’s Law states that

A) supply creates its own demand.

B) as the real wage rate falls, the quantity of labor demanded increases.

C) as the unemployment rate rises, the inflation rate falls.

D) there is a relationship between the unemployment rate, real GDP, and potential GDP.

E) a higher inflation rate leads to a higher nominal interest rate.

30) Okun’s Law says that the difference between the unemployment rate and the natural unemployment rate determines

A) potential GDP.

B) real GDP.

C) the gap between potential GDP and real GDP.

D) the gap between the inflation rate and the unemployment rate.

E) the real interest rate.