1.Which type of unemployment would increase if individuals move from full-time to part-time employment?

a. Cyclical

b. Structural

c. Annual

d. Frictional

e. Unemployment would not be affected by this change

2.Assume a contractionary gap of $4 trillion. With MPC equal to 0.75, what would be the recommended fiscal policy action in order to return output to full employment levels?

a. Increase taxes by $4 trillion

b. Decrease spending by $1 trillion

c. Increase spending by $1 trillion

d. Purchase $1 trillion worth of government securities

e. Decrease taxes by $4 trillion

3.The natural rate of unemployment

a. means that the economy will always operate at its natural rate.

b. is equal to the total of frictional and structural employment.

c. means that the economy will always realize its potential output

d. is a fixed unemployment rate of 5% that does not change over time

e. is unattainable given an economy's existing resources.