Does the existence of unemployment insurance eliminate the economic costs of unemployment?
While unemployment insurance reduces the costs of unemployment to the individual worker suffering from losing a job, it does not eliminate the economic or social costs of unemployment. The economic cost of unemployment is the output of goods and services lost to the economy when labor resources are unemployed. If the economy is experiencing unemployment, it is losing the production of goods and services that can never be replaced. Unemployment insurance simply spreads the costs of unemployment over the entire economy but does not eliminate the cost to the economy as a whole.
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The welfare effects of a quota depend, to considerable extent, upon
A) who has the quota license. B) the size of the quota. C) elasticities of domestic demand and supply. D) all of the above.
If President Obama agrees with his economic advisers who advocate cutting the rate of unemployment to 3 percent and the rate of inflation to 2 percent, you know he
a. believes the Phillips curve represents his only options b. believes in the rational expectations theory c. is a Keynesian d. is a neo-Keynesian e. believes the Laffer curve has validity
According to Keynes, once a system attains an economy-wide equilibrium
A. planned investment will be zero. B. the economy will be at full productive capacity. C. there may or may not be excess productive capacity. D. planned consumption will be zero.
Suppose that at the beginning of a loan contract, the real interest rate is 4% and expected inflation is currently 6%. If actual inflation turns out to be 7% over the loan contract period, then
A) borrowers gain 1% of the loan value. B) lenders gain 1% of the loan value. C) borrowers lose 3% of the loan value. D) lenders gain 3% of the loan value.