What reasons would economists give for an increase in the natural rate of unemployment that could have occurred from 2007 to 2011? What argument would suggest that the natural rate of unemployment may not have risen?
What will be an ideal response?
Some economists claimed that certain jobs and even certain industries have disappeared from the United States permanently. According to this argument, there is a mismatch between the skills of the U.S. labor force and the skills that the modern job market demands. However, such assertions may be the inaccurate. With a high rate of unemployment—such as the 9 percent seen in 2009—it is difficult to determine what portion of the unemployment is cyclical unemployment tied to the recession and what part is the natural rate of unemployment. We will be able to draw a more definitive conclusion only after the recession has ended and unemployment has declined to a more consistent level.
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If the economy has a natural unemployment rate of 4 percent and potential GDP of $5 trillion, what will be real GDP according to Okun's Law if the unemployment rate rises to 5 percent?
What will be an ideal response?
If the government wanted to efficiently limit the emission of carbon monoxide by all firms to exactly 4 million tons it could
A) issue rights to pollute worth 4 million tons and let the firms trade those rights in a market. B) appeal to firms' environmental conscience to pollute less. C) subsidize production. D) rely on the Coase Theorem.
The major incentive for cost minimization is the
a. power of shareholders in the company. b. fear of top management by workers. c. discipline imposed by the market system. d. impact on U.S. corporations of taxing by the government.
An agent hired by the owner of productive resources to control the production process is:
A. a self-proprietor. B. a laborer. C. an assembly worker. D. a firm manager.