Question

1. As a large number of students graduate from college, which category of unemployment would increase?

Group of answer choices

a. Potential unemployment

b. Cyclical unemployment

c. Structural unemployment

d. The graduating students will have no effect on unemployment

e. Frictional unemployment

2. If an economy experiences a positive demand shock, the appropriate monetary policy would be to

Group of answer choices

a. More than one of these is the correct answer

b. Decrease government expenditures

c. Increase government expenditures

d. Increase the money supply

e. Decrease the money supply

3. Real GDP tends to understate our economic well-being because it

Group of answer choices

a. Includes the value of volunteer activity

b. Includes health care costs related to the consumption of cigarettes

c. Includes the value of services produced in the home

d. Includes expenditures on crime prevention equipment

e. Excludes the value of leisure

4. When the government changes its expenditures, GDP changes. Which of the following would cause the change in GDP to be less than the full multiplier effect?

Group of answer choices

a. taxes necessarily change when government spending changes

b. money demand changes when real income changes

c. the money supply changes when real income changes

d. people do not expect much from the government

e. aggregate spending does not respond to changes in the interest rate

PLEASE ANSWER ALL 4 MULTIPLE QUESTIONS LIKE CHEGG SUGGESTS, I WILL GIVE A THUMBS UP

Answer 1

1> e. Frictional unemployment

Frictional unemployment refers to the time lag to find a job, here a large number of students start finding jobs, so frictional unemployment will rise.

2> e. Decrease the money supply

Changing the expenditure is fiscal policy, not monetary policy. Now, increase in AD leads to a boom in the economy away from the potential output, thus contractionary policy is required here, so decreasing the money supply will work.

3> e. Excludes the value of leisure

GDP does not include non-material benefits. So, well-being in the form of leisure is not part of GDP.

4> a. taxes necessarily change when government spending changes

Due to the higher government expenditure, people will have higher income and thus they need to pay more taxes, thus, it may lead to a lesser than the full multiplier effect.