Typically, employers compete with each other in the labor market to get and to retain the best possible workers. Explain how such competition might prevent the unemployment rate from ever being close to zero
What will be an ideal response?
When the unemployment rate is low, employers will offer a relatively high wage to attract high-quality job applicants and to counter poaching of their high-quality employees. Since the cost of labor is high, employers will create as few jobs as possible. The high wage, as intended, will attract a fair number of job seekers, many of whom will remain unemployed.
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GDP accounting ignores
A) all non-market forms of production. B) illegal (black market) production. C) economic value added. D) all of the above.
If we compare the U.S. GDP and the Chinese GDP
A) real GDP per person is about the same in the two countries. B) U.S. real GDP per person is less than China's real GDP per person once we adjust for currency differences. C) China's real GDP per person is less than real GDP per person in the United States. D) real U.S. GDP per person was much larger than China's real GDP per person when purchasing power parity prices are used but is less than China's real GDP per person when exchange rate prices are used.
Barter was more feasible in primitive societies than in modern societies because: a. there was no inflation in primitive societies
b. there were many goods available for trade in primitive societies, so people could always find the goods that they wanted. c. specialization was limited and thus there were few goods available for trade in primitive societies. d. specialization was limited and thus there were many goods available for trade in primitive societies. e. people in primitive societies had limited wants.
According to Baumol and Blinder, the real-world multiplier will be smaller than 1/(1 ? MPC) because the 1/(1 ? MPC) measure is based on
a. a model that ignores inflation associated with the expansion of income. b. a model that ignores taxes that tend to change as income changes. c. a model that ignores the effects of international trade. d. all of the above.