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1.Which economic theory proposes that inflation can be driven by cost pressures, commonly referred to as 'cost-push' inflation?

2.Is it possible for the observed unemployment rate to fall below the natural unemployment rate, and if so, under what conditions?

Yes, but only temporarily and accompanied by inflationYes, but only over the long term and with rising inflationYes, but only briefly and if the price level remains unchangedYes, but only in the long term and if prices stay stableNo, it cannot fall below the natural rate

3.What components are typically combined to define the natural rate of unemployment?

Seasonal unemployment plus frictional unemploymentCyclical unemployment combined with frictional unemploymentStructural unemployment together with frictional unemploymentStructural unemployment and cyclical unemployment combinedNone of the above

4.According to proponents of the classical labor market theory, which statement best describes the impact of monetary and fiscal policies on output and employment?

Neither monetary nor fiscal interventions influence output and employment levels.Monetary policy affects output and employment, but fiscal policy does not.Fiscal policy impacts output and employment, whereas monetary policy does not.Both fiscal and monetary policies have a significant effect on output and employment.None of the above.

Aggregate Supply, Unemployment And Inflation – MCQs

1.Which economic theory proposes that inflation can be driven by cost pressures, commonly referred to as 'cost-push' inflation?

2.Is it possible for the observed unemployment rate to fall below the natural unemployment rate, and if so, under what conditions?

3.What components are typically combined to define the natural rate of unemployment?

4.According to proponents of the classical labor market theory, which statement best describes the impact of monetary and fiscal policies on output and employment?

5.According to the classical labor market theory, how do wage adjustments that balance labor supply and demand typically happen?