.25..objective.

Question 1 If people are made unemployed because of a fall in aggregate demand this is known as: a) Frictional unemployment b) Seasonal unemployment c) Cyclical unemployment d) Structural unemployment Question 2 Supply-side policies are most appropriate to cure: a) Involuntary unemployment b) Cyclical unemployment c) Voluntary unemployment d) A fall in aggregate demand Question 3 The natural rate of unemployment is likely to fall if: a) Unemployment benefits increase b) Income tax increases c) More training is available for the unemployed d) Geographical immobility increases Question 4 If the real wage is above the equilibrium level in the labour market: a) The quantity demanded of labour is higher than the quantity supplied b) The quantity demanded of labour equals the quantity supplied c) The quantity demanded of labour is lower than the quantity supplied d) The real wage will automatically rise in the short run to bring about equilibrium Question 5 If there is cyclical unemployment in the economy the government might: a) Increase interest rates b) Encourage savings c) Cut taxes d) Reduce government spending Question 6 Occupational immobility of labour occurs if: a) People lack information b) People do not want to work c) People do not have the right skills to accept a new job d) People cannot afford to move location Question 7 Which of the following is not a supply-side measure? a) Increased training b) Providing more information c) Helping individuals to move location to find work d) Increasing spending on existing industries Question 8 Reducing involuntary unemployment: a) Helps the economy move on to the Production Possibility Frontier b) Helps shift the economy's ProductionPossibility Frontier outwards c) Helps the economy move along its Production Possibility Frontier d) Helps the economy move inside the Production Possibility Frontier Question 9 Less demand in the economy may increase unemployment; this may lead to less spending which may reduce demand further. This process is called: a) The upward accelerator b) The downward multiplier c) The upward PPF d) The downward mpc Question 10 To reduce cyclical unemployment the government might: a) Increase the budget surplus b) Increase the balance of payments deficit c) Increase the budget deficit d) Reduce government expenditure