Practice Detailed Discussion (3) - Chapter 2: Theory of Income and Employment

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6 sample questions

Question 1.
What is the definition of Aggregate Demand?
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Consider the components that make it up.
Question 2.
Give an example of frictional unemployment.
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Think about job changes.
3Question 3.
What happens when aggregate demand exceeds aggregate supply?
- Inflation occurs
- Underemployment occurs
- No change
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Think about how demand affects price levels.
4Question 4.
Is it true that unemployment can occur even in an equilibrium state?
- True
- False
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Consider the impact of insufficient demand.
Question 5.
Analyze the effect of a government stimulus package on an economy facing cyclical unemployment. What mechanisms would you expect to observe?
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Consider how demand influences supply and employment.
Question 6.
Discuss the long-term implications of persistent underemployment on an economy's growth potential.
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Evaluate the impacts of unutilized skills on the economy.

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