Which kind of issue in the labor market do neoclassical economists think is the least important from a policy perspective?

1. natural rate of unemployment
2. full employment
3. frictional unemployment
4. structural unemployment
5. cyclical unemployment

Which statement most closely reflects a position held by a neoclassical economist and not a Keynesian economist?

1. Government spending should be used to bring an economy out of a recession.
2. Prices are often sticky and can cause short run economic fluctuations.
3. There is a short run tradeoff between inflation and unemployment.
4. Prices are flexible and can help an economy move back to potential.
5. Raising taxes is a contractionary fiscal policy.

According to the neoclassical economist, what is the shape of the relationship between unemployment and inflation in the long run?

1. no relationship
2. negative/downward sloping
3. positive/upward sloping
4. horizontal—unemployment can increase or decrease but the inflation rate stays the same
5. vertical—inflation can increase or decrease but the unemployment rate stays the same