ECN 101 FINAL PRACTICE EXAM QUESTIONS AND
ANSWER | 2025/2026 UPDATE | SYRACUSE
UNIVERSITY | 100% CORRECT!!
If the rate of separation is 10% and the rate of finding a job is 20%, then the
equilibrium unemployment rate is
a) 33.33%
b) 50.00%
c) 66.67%
d) 100.00% Answer - A
When there is an increase in the rate of unionization in an economy, then
a) frictional unemployment increases.
b) the natural rate of unemployment increases.
c) both a) and b) are correct.
d) neither a) nor b) are correct. Answer - B
If the Philips curve is 𝜋 = 𝐸𝜋 − 3(𝑢 − 𝑢𝑛) + 𝜈 and there are no supply shocks. If
monetary policy's target is 6%, the natural rate of unemployment is 6%, and
inflation has been 9%, what does the unemployment rate have to be to achieve
their target?
, a) 3%
b) 6%
c) 7%
d) 9% Answer - C
If the sacrifice ratio is estimated to be 3, then to reduce inflation by 3
percentage points, would require
a) a total output increase of 1%.
b) a total output increase of 9%.
c) a total output decrease of 1%.
d) a total output decrease of 9%. Answer - D
Which of the following would be an explanation for a hysteresis effect that
increases the natural rate of unemployment?
a) a string of positive shocks to aggregate demand (shifts right of aggregate
demand).
b) labor outsiders are better able to negotiate higher wages for themselves.
c) skills of cyclically unemployed workers deteriorate over time.
d) oil prices begin to fall and then continually and steadily fall over time.
Answer - C
Which of the following is a reason to support active stabilization policy?
a) policy affects the economy with a lag.
ANSWER | 2025/2026 UPDATE | SYRACUSE
UNIVERSITY | 100% CORRECT!!
If the rate of separation is 10% and the rate of finding a job is 20%, then the
equilibrium unemployment rate is
a) 33.33%
b) 50.00%
c) 66.67%
d) 100.00% Answer - A
When there is an increase in the rate of unionization in an economy, then
a) frictional unemployment increases.
b) the natural rate of unemployment increases.
c) both a) and b) are correct.
d) neither a) nor b) are correct. Answer - B
If the Philips curve is 𝜋 = 𝐸𝜋 − 3(𝑢 − 𝑢𝑛) + 𝜈 and there are no supply shocks. If
monetary policy's target is 6%, the natural rate of unemployment is 6%, and
inflation has been 9%, what does the unemployment rate have to be to achieve
their target?
, a) 3%
b) 6%
c) 7%
d) 9% Answer - C
If the sacrifice ratio is estimated to be 3, then to reduce inflation by 3
percentage points, would require
a) a total output increase of 1%.
b) a total output increase of 9%.
c) a total output decrease of 1%.
d) a total output decrease of 9%. Answer - D
Which of the following would be an explanation for a hysteresis effect that
increases the natural rate of unemployment?
a) a string of positive shocks to aggregate demand (shifts right of aggregate
demand).
b) labor outsiders are better able to negotiate higher wages for themselves.
c) skills of cyclically unemployed workers deteriorate over time.
d) oil prices begin to fall and then continually and steadily fall over time.
Answer - C
Which of the following is a reason to support active stabilization policy?
a) policy affects the economy with a lag.
