Long–Run Consequences of Stabilization Policies
Which factor is primarily responsible for causing structural unemployment?
Seasonal changes in industries
Technological changes outpacing workers' skills
Decreases in aggregate demand
Frictional job turnover
Which of these is considered a measure of poverty?
Inflation rate
Gross Domestic Product (GDP)
Unemployment rate
The poverty line/threshold
How would an unexpected rapid growth in domestic inflation rates most likely affect a nation's exchange rate and trade balance?
The currency appreciates and the trade balance worsens as imports become more attractive.
The currency depreciates and the trade balance initially worsens before potentially improving with time.
The currency appreciates and the trade balance remains constant due to price stickiness.
The currency depreciates but the trade balance improves because of increased export competitiveness.
What is the impact of supply-side economic policies on the productive capacity and long-run aggregate supply (LRAS)?
They increase the productive capacity and shift the LRAS to the right
They decrease the productive capacity and shift the LRAS to the left
They primarily affect short-run aggregate supply (SRAS)
They have no impact on the productive capacity and LRAS
How would a central bank most likely respond to an unanticipated period of rapid economic growth that may lead to high inflation?
Buy government securities on the open market.
Increase money supply.
Raise interest rates.
Decrease reserve requirements for banks.
What impact could an increase in foreign direct investment have on a country's economic growth rate?
Decelerate it by causing an outflow of capital from the country.
Accelerate it by increasing capital formation and productivity.
Accelerate it temporarily but lead to decreased growth due to interest payments abroad.
Have no effect if all investments are directed towards non-productive assets like real estate.
Which scenario best illustrates how monetary policy can impact long-term economic growth?
Decreasing money supply during an expansionary period leading innovation investments.
Central bank maintains high-interest rates persistently discouraging technological advancements.
Central bank increases liquidity during a recession fostering recovery through easier credit conditions.
Persistent quantitative easing leading directly to significant advances in productivity.

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In the context of Laffer Curve theory, what might happen if the government were to significantly increase income tax rates beyond a certain point?
Decreased budget deficit due to higher efficiency in revenue collection.
Greater equality in wealth distribution through diminished people's ability to save and invest.
Lower total tax revenue due to decreased incentives to work and invest.
Sustained long-term economic growth owing to enhanced government spending capacity.
Which type of fiscal policy focuses on the supply side and aims to increase output?
Demand-side fiscal policy
Supply-side fiscal policy
Expansionary fiscal policy
Contractionary fiscal policy
If technological advancement leads to products being produced more efficiently, what is the likely long-term impact on the price level for those products?
Increased prices due to innovation costs
Decrease
Increases prices from product scarcity
No change as efficiency offsets demand increases