The lowest level of unemployment compatible with price stability
A. Is estimated at between 0 and 2 percent unemployment.
B. Is referred to as full employment.
C. Allows for some cyclical unemployment.
D. Is equal to the natural rate of unemployment plus the inflation rate.
Answer: B
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What mechanism assures that producers use inputs efficiently?
a. governmental regulations on use of resources b. altruism c. the desire for profit d. an innate desire to be efficient e. All of the above are correct.
Which of the following examples shows marginal revenue product?
a. The newest staff member, Genevieve, started with a salary of $1,000 per week. b. Stan had sales of $1,000 per week and was paid $700, leaving profit of $300. c. When JP joined the team, the mechanics were able to service six more cars per day. d. A recent hire, Ganesh, added $1,600 per week to the accounting firm’s hourly billing.
Suppose that the current money market equilibrium features an interest rate of 5 percent and a quantity of $2 trillion. If the Fed raises the discount rate, which of the following is most likely to be the new money market equilibrium?
A. An interest rate of 6 percent and a quantity of $1.5 trillion. B. An interest rate of 5 percent and a quantity of $2 trillion. C. An interest rate of 4 percent and a quantity of $2.5 trillion. D. An interest rate of 3 percent and a quantity of $3 trillion.
A decrease in aggregate demand and the subsequent cutbacks in production lead to:
A. frictional unemployment. B. cyclical unemployment. C. cost-push unemployment. D. structural unemployment.