Full employment means which of the following is zero?
a. structural unemployment
b. cyclical unemployment
c. frictional unemployment
d. aggregate unemployment
QUESTION 2The relationship between MPC and MPS is:
a. 1 + MPC = MPS.
b. 1 MPC = MPS.
c. 1 + MPS = MPC.
d. MPC MPS = 1.
QUESTION 3If M = 200, P = 100, and Q = 10, then V is:
a. 20.
b. 2.
c. 10.
d. 5.
e. 2,000.
QUESTION 4Full employment is the rate of employment that results when:
a. all the labor resources of the economy are employed full time.
b. cyclical unemployment has reached its maximum.
c. everybody who wants a job can find one.
d. only frictional and structural unemployment are present.
QUESTION 5The marginal propensity to save is
a. the change in saving divided by the change in income.
b. the change in income divided by the change in saving.
c. saving divided by income.
d. income divided by saving.
e. saving divided by consumption.
QUESTION 6Monetarists believe:
a. the cause-and-effect relationship hypothesized by the Keynesians understates the impact of stimulative monetary policy.
b. the cause-and-effect relationship hypothesized by the Keynesians is an accurate description of how monetary policy works.
c. since the economy is operating at full employment, any stimulative monetary policy will cause the inflation rate to rise.
d. the cause-and-effect relationship hypothesized by the Keynesians is backwards, and decreases in the money supply actually stimulate economic activity.
e. the cause-and-effect relationship hypothesized by Keynesians will not work because investment does not respond to changes in interest rates.
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