(Solution) If in country X the cyclical rate of unemployment equals 2% and the actual rate of unemployment equals 5% then the natural rate of unemployment in...

19 multiple choice questions. ECON110 Macroeconomic Principles.Q1: If in country X the cyclical rate of unemployment equals ?2% and the

 

actual rate of unemployment equals 5% then the natural rate of

 

unemployment in country X equals:

 

Select one:

 

a. 7%

 

b. 6%

 

c. 9%

 

d. 3%

 

Q2:

 

A tax cut that is matched by a decline in government expenditure will

 

not lead to a fall in the equilibrium level of GDP.

 

Select one:

 

True

 

False

 

Q3:

 

One of the key roles of contemporary ±scal policy as it is practised in

 

Australia is the:

 

Select one:

 

a. increase of exports

 

b. reduction of unemployment

 

c. reduction of imports

 

d. distribution of income

 

Q4: An automatic stabiliser is:

 

Select one:

 

a. the tendency for in²ation to fall as unemployment rises

 

b. a tax or form of government expenditure that has the e³ect of reducing

 

the size of the multiplier

 

c. a policy for growth of an economy where the current account of the

 

balance of payments is kept in balance

 

d. a monetary or ±scal policy that aims to smooth out the business cycle

 

Q5: A recession occurs when either _____ and/or _______.

 

Select one:

 

a. potential output grows rapidly; actual output equals potential output

 

b. potential output grows slowly; actual output falls below potential output

 

c. potential output grows slowly; actual output rises above potential

 

output

 

d. potential output grows rapidly; actual output falls below potential

 

output

 

Q6: Government policies that are used to a³ect planned aggregate

 

expenditure, with the objective of eliminating output gaps, are called _____

 

policies.

 

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