Practice Questions
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What is the term used to describe the level of unemployment that exists when the economy is at full employment equilibrium?
This term means the lowest level of unemployment when the economy is healthy. Other options are incorrect because Some might think this is correct bec...
Which type of unemployment occurs when workers are temporarily laid off due to seasonal work fluctuations, yet the economy is at full employment equilibrium?
Seasonal unemployment happens when jobs depend on the season. Other options are incorrect because Frictional unemployment is when people are between j...
Which of the following statements best describes the relationship between the natural rate of unemployment and full employment equilibrium as indicated by economic indicators?
The natural rate of unemployment is the level of joblessness when the economy is healthy. Other options are incorrect because Many think full employme...
In the context of Keynesian economics, what is the impact of inflation on achieving full employment equilibrium?
Higher inflation can lead to lower unemployment in the short run. Other options are incorrect because Some might think inflation doesn't change employ...
How does an increase in aggregate demand affect GDP in the context of achieving full employment equilibrium?
When people want to buy more goods and services, businesses produce more. Other options are incorrect because This option suggests that more demand wo...
What is the condition described as full employment equilibrium in economics?
Full employment equilibrium means the economy is working at its best. Other options are incorrect because Some might think full employment means using...
Which type of unemployment occurs when workers are not able to find jobs due to a mismatch of skills, even though jobs are available?
This type of unemployment happens when workers' skills do not match the jobs that are open. Other options are incorrect because This type is about peo...
What type of unemployment is primarily addressed by achieving full employment equilibrium in an economy?
Cyclical unemployment happens when the economy is doing poorly. Other options are incorrect because Some think structural unemployment is the main iss...
Full Employment Equilibrium : Efficient resource utilization :: Economic recession : ?
During an economic recession, many people lose their jobs. Other options are incorrect because Some might think a recession means people want to buy m...
Arrange the following steps in the process of achieving Full Employment Equilibrium in an economy: A) Aggregate demand increases due to external factors, B) The economy's output reaches its potential level, C) Short-run aggregate supply adjusts to meet changing demand, D) Long-run aggregate supply is established at this new equilibrium.
First, demand goes up due to outside factors. Other options are incorrect because This option suggests that output reaches its potential before supply...
If Country Alpha experiences a recession in its trading partner, which of the following is the most likely cause of the subsequent decrease in Country Alpha's output?
When a trading partner has a recession, they buy less from Country Alpha. Other options are incorrect because Some might think that better productivit...
A country experiences a sudden recession in its primary trading partner, leading to a significant decrease in export demand. Which of the following outcomes is most likely to occur in the country’s economy regarding Full Employment Equilibrium?
When exports drop, people and businesses earn less money. Other options are incorrect because Some might think that local spending can make up for los...
Country Beta is experiencing a recession due to a significant decline in exports, which has decreased overall aggregate demand. How might this change affect Country Beta's position concerning Full Employment Equilibrium?
When exports drop, people buy less. Other options are incorrect because Some might think that external demand changes don't matter; It's a common mist...
In a Full Employment Equilibrium, the economy operates at its potential level, where the intersection of aggregate demand, short-run aggregate supply, and long-run aggregate supply occurs. If a recession in a trading partner country decreases demand for exports, the economy of country Alpha may experience a shift in its __________, leading to potential unemployment.
When exports drop, people buy less from Alpha. Other options are incorrect because Some might think supply changes when demand drops; People might con...
Which of the following statements correctly describe the implications of Full Employment Equilibrium in an economy? Select all that apply.
Full Employment Equilibrium does not mean no unemployment or perfect resource use. Other options are incorrect because Some might think full employmen...
If country Alpha experiences a recession in a major trading partner, which of the following is likely to occur in terms of full employment equilibrium?
When a major trading partner has a recession, they buy less from Alpha. Other options are incorrect because Some might think that a recession means mo...
How does a recession in a major trading partner affect the full employment equilibrium in a country?
When a major trading partner has a recession, they buy less from other countries. Other options are incorrect because Some might think that a recessio...
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