During the Great Depression, cyclical unemployment increased as the recession continued. This increase in cyclical unemployment
A) could have increased or decreased the natural rate of unemployment.
B) decreased the natural rate of unemployment.
C) increased the natural rate of unemployment.
D) had no effect on the natural rate of unemployment.
D
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Out of a set of feasible alternatives, an optimizer should choose the alternative with the:
A) highest net benefit. B) highest opportunity cost. C) lowest total cost, regardless of benefit. D) highest total benefit, regardless of cost.
The case of New Zealand, described in the text, concludes that a country's current account deficits are not sustainable if a country's
A) prospects for long term economic growth are above its global deficit growth. B) ability to sustain current account deficits is questionable. C) unproductive industrial sectors and its prospects for long run growth. D) labor productivity is below that of most other countries. E) exchange rate has fallen relative to other currencies.
The idea that consumption increases at the same rate as national income so that MPC is constant, is known as the
a. absolute income hypothesis b. Keynesian income hypothesis c. relative income hypothesis d. permanent income hypothesis e. rational income hypothesis
The fallacy of composition is the fallacious view that
a. economic activity will benefit everyone. b. what is true for the individual will also be true for the group. c. it is possible for the whole to be greater than the sum of the individual parts. d. association does not necessarily indicate causation.