Suppose that in an economy the structural unemployment rate is 2.2 percent, the natural unemployment rate is 5.3 percent, and the cyclical unemployment rate is 2 percent. The frictional unemployment rate is _________ percent and the actual unemployment rate (in this economy) is ___________ percent.
a. 7.5; 3.3
b. 4.2; 11.7
c. 7.3; 3.1
d. 3.1; 7.3
Answer: d. 3.1; 7.3
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The _____ of an income tax comes from the _____ effect
a. excess burden; substitution b. excess burden; income c. excess benefits; substitution d. excess benefits; income
If firms in a monopolistically competitive industry experience short-run losses
A) some firms would like to exit the industry but find they cannot. B) firms increase prices further, until they make at least a normal return. C) firms increase advertising spending to increase demand, until they make at least a normal return. D) some firms exit the industry, causing the demand curves for the remaining firms to shift to the right until they earn a normal profit.
Two goods, X and Y, are called complements if
a. an increase in PX causes more Y to be bought. b. an increase in PX causes less Y to be bought. c. an increase in PY causes less Y to be bought. d. an increase in income causes more of both X and Y to be bought.
The Coase Theorem suggests that under its assumption, the efficient solution to an externality problem: a. depends on who owns property rights to the resources
b. is enhanced by government involvement in the negotiations. c. can be enhanced through the use of taxes. d. does not depend on the distribution of property rights.