Economic Growth and Unemployment

Actual economic growth is caused by an increase in quality and quantity of resources.

• True

• False

Potential economic growth is caused by an increase in consumption and net exports.

• True

• False

Actual economic growth can be represented by:

• Outward shift of PPF

• Inward shift of PPF

• Movement of a point inside towards a point on PPF

• Movement of a point on PPF towards a point inside

Potential economic growth can be represented by:

• Outward shift of PPF

• Inward shift of PPF

• Movement of a point inside towards a point on PPF

• Movement of a point on PPF towards a point inside

Actual economic growth can be represented by:

• Leftward shift of AD

• Leftward shift of LRAS

• Rightward shift of AD

• Rightward shift of LRAS

Potential economic growth can be represented by:

• Leftward shift of AD

• Leftward shift of LRAS

• Rightward shift of AD

• Rightward shift of LRAS

Recession caused by demand shock will cause:

(Select 2 options)

• AD to shift left

• LRAS to shift left

• a movement of a point on PPF towards a point inside

• inward shift of PPF

Recession caused by supply shock will cause:

(Select 2 options)

• AD to shift left

• LRAS to shift left

• a movement of a point on PPF towards a point inside

• inward shift of PPF

Full employment means everyone is employed and there is zero unemployment.

• True

• False

Natural rate of unemployment includes structural unemployment and _______________________.

• Cyclical unemployment

• Frictional unemployment