If inflationary expectations increase, we can infer that:
a. unemployment is above the natural rate
b. the economy is not on the long-run Phillips curve.
c. the short-run Phillips curve is shifting to the left.
d. output is below potential GDP.
e. the unemployment rate is at the natural rate.
b
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Cyclical unemployment
A. occurs even when an economy is producing at a point on its production possibilities frontier. B. occurs only during a recession. C. tend to occur when an economy experiences inflation. D. is a part of an economy's natural rate of unemployment.
Refer to Figure 16-11. If government purchases increase by $100 billion and lead to an ultimate increase in aggregate demand as shown in the graph, the difference in real GDP between point A and point B will be
A) more than $100 billion. B) less than $100 billion. C) $100 billion. D) There is insufficient information given here to draw a conclusion.