Suppose that the unemployment rate equals 4.5 percent and that the natural unemployment rate is 5.5 percent. We can conclude that
A) the output gap is negative.
B) the output gap equals zero.
C) the output gap is positive.
D) we have mismeasured the natural unemployment rate.
C
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The endowment effect is the tendency:
A. to place a higher value on something a person already owns simply because they own it. B. to have a harder time parting with wealth people have held the longer the amount of time they hold it. C. for a person to believe they hold a particular skill because someone told them they do. D. for people to want to bestow their own beliefs on others when making decisions.
According to Schumpeter, why don't competitive firms innovate?
Nations will attract investment and its citizens will engage in productive activities when the institutions and policies of that country
a. encourage market exchange. b. reward innovation. c. protect people and their property. d. all of the above.
The persistent U.S. trade deficit with Japan is
a. surprising because one would expect that bilateral trade between two countries with flexible exchange rates would be in balance. b. surprising because the Japanese are high cost producers of many goods that are purchased in large quantities by U.S. consumers. c. not surprising because there is no reason why bilateral trade between two countries should be in balance. d. proof that the trade practices of the Japanese are unfair toward the United States.