Test Prep For AP® Courses
Which kind of issue in the labor market do neoclassical economists think is the least important from a policy perspective?
- natural rate of unemployment
- full employment
- frictional unemployment
- structural unemployment
- cyclical unemployment
Which statement most closely reflects a position held by a neoclassical economist and not a Keynesian economist?
- Government spending should be used to bring an economy out of a recession.
- Prices are often sticky and can cause short run economic fluctuations.
- There is a short run tradeoff between inflation and unemployment.
- Prices are flexible and can help an economy move back to potential.
- Raising taxes is a contractionary fiscal policy.
According to the neoclassical economist, what is the shape of the relationship between unemployment and inflation in the long run?
- no relationship
- negative/downward sloping
- positive/upward sloping
- horizontal—unemployment can increase or decrease but the inflation rate stays the same
- vertical—inflation can increase or decrease but the unemployment rate stays the same