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mid2reviewsu08

# mid2reviewsu08 - Mid2 Review Summer08 1 If the number of...

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Mid2 Review Summer08 1. If the number of employed workers equals 200 million and the number of unemployed workers equals 20 million, the unemployment rate equals _____ percent (rounded to the nearest percent). A) 0 B) 9 C) 10 D) 20 2. If the fraction of employed workers who lose their jobs each month (the rate of job separation) is 0.01 and the fraction of the unemployed who find a job each month is 0.09 (the rate of job findings), then the natural rate of unemployment is: 3. If the steady-state rate of unemployment equals 0.125 and the fraction of unemployed workers who find jobs each month (the rate of job findings) is 0.56, then the fraction of employed workers who lose their jobs each month (the rate of job separations) must be: Use the following to answer questions 4-5: Exhibit: Shift in Aggregate Demand Page 1

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4. (Exhibit: Shift in Aggregate Demand) In this graph, initially the economy is at point E, with price P 0 and output Y . Aggregate demand is given by curve AD 0 , and SRAS and LRAS represent, respectively, short-run and long-run aggregate supply. Now assume that the aggregate demand curve shifts so that it is represented by AD 1 . The economy moves first to point ______ and then, in the long run, to point ______. A) A; D B) D; A C) C; B D) B; C 5. (Exhibit: Shift in Aggregate Demand) Assume that the economy is initially at point A with aggregate demand given by AD 2 . A shift in the aggregate demand curve to AD 0 could be the result of either a(n) ______ in the money supply or a(n) ______ in velocity. Use the following to answer questions 6-7: Exhibit: Supply Shock
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