Question 1
What is meant by policy implication?
A.
Unemployed resources below Yfe. B.
Negative gap → expansionary policy may help. C.
Actual real GDP minus potential real GDP. D.
Actual above potential — overheating.
Question 2
What is meant by wage inflation?
A.
Negative gap only temporary. B.
Tight labour market pushes wages up. C.
Actual below potential — spare capacity. D.
Actual real GDP minus potential real GDP.
Question 3
What is meant by estimation difficulty?
A.
Tight labour market pushes wages up. B.
Actual below potential — spare capacity. C.
Potential GDP is unobservable. D.
Negative gap only temporary.
Question 4
Output gap equals:
A.
Actual GDP minus potential GDP B.
Exports minus imports C.
MPC × income D.
C + I + G
Question 5
What is meant by negative output gap?
A.
Actual below potential — spare capacity. B.
Tight labour market pushes wages up. C.
Actual real GDP minus potential real GDP. D.
Falling AD → unemployment → lower C.
Question 6
What is meant by spare capacity?
A.
Unemployed resources below Yfe. B.
Actual above potential — overheating. C.
Actual below potential — spare capacity. D.
Falling AD → unemployment → lower C.
Question 7
What is meant by deflationary spiral?
A.
Falling AD → unemployment → lower C. B.
Actual real GDP minus potential real GDP. C.
Negative gap only temporary. D.
Negative gap → expansionary policy may help.
Question 8
Spare capacity is associated with:
A.
Hyperinflation B.
Full capacity C.
A negative output gap D.
Positive output gap
Question 9
Overheating may lead to:
A.
LRAS shifting left only B.
Deflation C.
Zero investment D.
Demand-pull inflation
Question 10
A positive output gap suggests:
A.
Trade surplus only B.
Actual GDP above potential C.
Zero unemployment always D.
Deflation
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