The unemployment rate is one measure of the economic health of our nation. Explain how the existence of discouraged workers and underemployed workers may undermine the usefulness of the unemployment rate for this purpose
The number of discouraged workers will tend to increase in an economic downturn. This increase will lead to a
decrease in the unemployment rate, since these workers will no longer be counted as unemployed members of the
labor force. Similarly, the number of underemployed workers will tend to increase in an economic downturn. This
leaves people worse off, but does not register as an increase in the unemployment rate. For these reasons, the
unemployment rate does not fully measure the state of the economy's economic health.
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Should the home country be "large" relative to its trade partners, its imposition of a tariff on imports would lead to an increase in domestic welfare if the terms of the trade rectangle exceed the sum of the
A) revenue effect plus redistribution effect. B) protective effect plus revenue effect. C) consumption effect plus redistribution effect. D) production distortion effect plus consumption distortion effect. E) terms of trade gain.
Equilibrium price and quantity are determined by:
A. demand. B. both supply and demand. C. supply. D. government regulations.
Nominal rigidity is another term for:
a. sticky prices. b. fixed exchange rates. c. menu prices. d. the trilemma.
An example of a good that can be used for money that has no intrinsic value is:
A. cigarettes. B. gold. C. Hershey kisses. D. paper dollar bills.