Cyclical unemployment is:
A. long-term and chronic unemployment that exists even when the economy is producing at a normal rate.
B. short-term unemployment that is associated with the process of matching workers with jobs.
C. the additional unemployment not captured in official statistics resulting from discouraged workers and involuntary part-time workers.
D. the extra unemployment that occurs during periods of recession.
Answer: D
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If Joe receives an increase in his wage rate and decides to decrease his hours worked, the
A) substitution effect and the income effect must be equal. B) substitution effect must exceed the income effect. C) income effect must exceed the substitution effect. D) substitution effect must be zero.
One of the interesting findings of a survey of firm managers by Blinder et al. is that:
A) the vast majority of firms pay considerable attention to marginal costs in making decisions about how much output to produce. B) the majority of respondents suggested that fixed costs are a relatively unimportant consideration when making output decisions. C) approximately 75 percent of respondents indicated that their marginal costs of production are rising over the relevant range of output. D) a significant percentage of respondents to the survey did not appear to understand the concept of marginal cost.
Assume that the central bank sells government securities in the open market. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real GDP and current international transactions in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium
a. Real GDP falls and the current international transactions balance becomes more negative (or less positive). b. Real GDP rises and the current international transactions balance becomes more negative (or less positive). c. Real GDP and the current international transactions balance remain the same. d. Real GDP rises and the current international transactions balance remains the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
The quantity theory of money is better able to
A. To explain the inflation rate in the long run B. To explain the full employment in the long run C. To explain the inflation rate in the short run