Question

, which of the following statements is (are) correct?
(x) Unemployment usually rises during the recession phase of the business cycle.
(y) Although the unemployment rate falls during an expansionary phase of the business cycle, an unemployment rate of zero is not obtainable.
(z) In 2011, the unemployment rate in the United States was above 8 percent for the entire year. Historical experience suggests that this rate is above the natural rate of unemployment, so that suggests real GDP growth was likely low during 2011.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only

Which of the following statements is (are) correct?
(x) The model of aggregate demand and aggregate supply explains the relationship between real GDP and
the price level.
(y) The aggregate demand curve slopes downward because higher prices cause real wealth to increase,
interest rates to decrease, and consumption to increase.
(z) The effect of an increase in the price level is represented by a movement upward along the aggregate
demand curve and the quantity demanded decreases as a result.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only

According to the wealth effect and the exchange-rate effect, an increase in the price level causes
A. the value of money holdings to decrease and net exports to decrease, respectively.
B. the value of money holdings to increase and net exports to increase, respectively.
C. the value of money holdings to decrease and net exports to increase, respectively.
D. the value of money holdings to increase and net exports to decrease, respectively.
E. None of the above

Answer 1