The shortfall between actual real GDP and potential GDP
A. decreases as the unemployment rate rises.
B. increases as the unemployment rate rises.
C. increases as the employment rate rises.
D. decreases as the labor force increases.
Answer: B
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A Phillips curve shows the short-run relationship between
A) potential GDP and real GDP. B) the nominal interest rate and the real interest rate. C) tax rates and tax revenues. D) the unemployment rate and the inflation rate.
Suppose there are two firms that make automobiles, Ferrari and General Motors. Ferrari has one assembly plant with only a few hundred employees. General Motors has several assembly plants and thousands of employees. If there are economies of scale in automobile production, which statement is true? a. General Motors should produce fewer cars to improve its efficiency. b. Efficiency allows
General Motors to use fewer raw materials per automobile. c. The output level that makes Ferrari most efficient also makes General Motors most efficient. d. When the ATC curves of the two firms cross, General Motor's ATC curve is falling. e. The average fixed cost curve for Ferrari is higher because they produce fewer cars.
Positive statements are
a. prescriptive. b. claims about how the world should be. c. claims about how the world is. d. made by economists speaking as policy advisers.
Answer the following statement(s) true (T) or false (F)
1. Economists agree that setting a minimum wage causes some unemployment. 2. Private-sector unions are the main cause of unemployment in the United States. 3. Unemployment insurance is thought to increase the rate of unemployment. 4. Technological advances generally reduce unemployment in the short term. 5. The prices of some goods and services can fall during inflation.