If the natural rate of unemployment equals 6 percent and the actual rate of unemployment equals 5 percent, then cyclical unemployment equals:
A. 11 percent.
B. -1 percent.
C. 1 percent.
D. -1.2 percent.
Answer: B
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The total factor productivity of an economy is the ratio of the economy's _____
a. total income to its total population b. output to its total stock of labor and capital c. stock of capital to its stock of labor d. total population to its total labor force e. total capital stock to its total population
Longer-term forecasts of the U.S. budget, a decade or more into the future, predict
a. small surpluses. b. enormous surpluses. c. small deficits. d. enormous deficits.
Is a benevolent command economy likely to achieve greater efficiency than a purely competitive market system? Explain.
What will be an ideal response?
If you accept the rational expectations hypothesis as accurate, what would you tell monetary policy makers who ask you how to more effectively manage the economy?
A. Only unanticipated policies will be effective once individuals understand how monetary policy works. B. Individuals base their economic expectations solely on current information, so repeating policy decisions that have worked in the past is the most effective path to take. C. Individuals do understand how monetary policy works, so consistency and predictability are the keys to effective policy making. D. Consumers do not understand the workings of monetary policy, so discretionary and nondiscretionary policies are equally effective.