Answer the following questions:
a. What are the three types of unemployment, and which two compose the natural rate?
b. Give an example of a person who would be counted in each type.
c. Would an economy with 2 percent actual unemployment be in a recession? Why or why not?
a. Cyclical, structural, and frictional are the three types of unemployment. The natural rate is composed of the structural and frictional.
b. Cyclical; a person gets fired from his job because a recession hits and consumer spending falls. Structural; a person gets fired from a job producing shoes, and the only available job is for a computer programmer. Frictional; a person quits her job in San Francisco and moves to New York and starts looking for a new job.
c. No, 2 percent is well below the natural rate of unemployment, which means the economy is in an economic boom.
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Explain productivity and discuss how it is related to the standard of living in terms of the circular flow model.
What will be an ideal response?
A significant benefit of monopolistic competition compared with pure competition is:
A. less likelihood of X-inefficiency. B. improved resource allocation. C. greater product variety. D. stronger incentives to achieve economies of scale.
Your bike is worth $100 and if you park it outside at school there is a 25% chance that it will be stolen. Your utility function for money is 
. Assume throughout that the bike value and money are interchangeable since you could sell the bike instantly at its value if necessary. Are you a risk lover, risk neutral or risk averse?
What will be an ideal response?
Most grievances that do not involve a contractual matter can be resolved by ______.
a. the chief of police b. the city attorney c. the police captain d. the first line supervisor