1. An illustration of crowding out in macroeconomics is best provided by...

a.An increase in tariffs causes a decrease in imports.

b.A decrease in the money supply decreases nominal GDP.

c.An increase in the money supply crowds out the issuance of privately held debt.

d.A fiscal expansion raises interest rates and thereby lowers private investment.

e.A decrease in government subsidies for low-cost housing causes an increase in private spending on housing.

2. If frictional unemployment is three percent, cyclical unemployment is two percent and structural unemployment as four percent, then the NAIRU is _____ percent and the actual unemployment rate is _____ percent.

a.7; 7

b.7; 9

c.6; 5

d.5; 9

e.6; 6

3. The idea that the actual rate of unemployment can influence the NAIRU is referred to as...

a.Efficiency-wage unemployment.

b.Rational expectations.

c.The market-clearing theory.

d.The Phillips curve.

e.Hysteresis.