1.Millions of Americans are now unemployed, largely for ____________ reasons.However, during this recession, if technology associated with home-based work increases, the result could be _________ rates of _____________ unemployment even after the recession ends.

A.Structural; higher; frictional

B.Frictional; lower; structural

C.Cyclical; higher; structural

D.Natural; lower; cyclical

2.Suppose by February 2021 the unemployment rate in America is 8.4% with inflation rates of 1.1%. This would indicate that aggregate demand and aggregate supply would intersect in segment ___ of the aggregate supply curve and the __________ of unemployment would be _______ than the natural rate of unemployment.

A.I; cyclical rate; greater

B.I; frictional; greater

C.II; structural; less t

D.III; cyclical; greater

3. What could cause the situation presented in question #2?

A.A large drop in labor productivity, combined with rising oil prices over the summer.

B.A large, sustained increase in the index of leading indicators and/or changes in the natural rate of unemployment.

C.A large, sustained drop in consumer and business confidence and perhaps a recession in Europe.

D.Stagflation and/or an increase in taxes or interest rates.

E.A and D only.

4.Using the information question #8, if oil prices fall through 2021 at the same time educational quality improves from millions of kids being home schooled rather than attending public schools - and if this continues through 2022- we could see:

A.Non-inflationary economic growth - especially if aggregate demand continues to move in the direction it is expected to throughout the summer and fall of 2020.

B.Stagflation stemming from the deleterious impact school closings would have on productivity.However, low oil prices would not impact the economy in any meaningful way.

C.Some offsetting effects that we are getting from the change in aggregate demand. Cyclical unemployment would fall and there would be lower rates of inflation as aggregate supply increases.

D.Aggregate supply would not change, but aggregate demand would rise a bit.

5.__________ occurs when aggregate demand _________.The chain of causation is often:

A.Deflation; decreases; a drop in consumer and business spending that leads to a decrease in aggregate demand.When aggregate demand decreases, large surpluses of unsold inventory accumulate.This causes sellers to lower prices which leads to deflation and a drop in GDP.

B.Inflation: increases; an increase in consumer spending and often low interest rates; as spending rises, aggregate demand increases into segment III of the aggregate supply curve.This causes labor and equipment shortages which puts upward pressure on prices.As prices increase, the CPI increases and GDP increases.

C.Staglation; decreases; an increase in input costs leads to higher prices and according to the law of demand, higher prices causes aggregate demand to fall.

D.Non-inflationary economic growth; increases; as taxes fall, consumer spending and business investment spending increases.This leads to an increase in aggregate demand, economic growth and a decrease in the CPI.

F.A and B only

G.C and D only