Rich lost his job six months ago because of budget cuts at the county landfill where he worked. He tried finding another job, but has not actively searched for work for three months. Rich would be considered by the Bureau of Labor Statistics to be
a. frictionally unemployed and would be counted in the official unemployment rate
b. seasonally unemployed and would be counted in the official unemployment rate
c. structurally unemployed and would be counted in the official unemployment rate
d. cyclically unemployed and would be counted in the official unemployment rate
e. a discouraged worker
E
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
Other things equal, expected income can be used as a direct measure of well-being
A) always. B) no matter what a person's preference to risk. C) if and only if individuals are not risk-loving. D) if and only if individuals are risk averse. E) if and only if individuals are risk neutral.
A transfer payment that rises automatically during a recession is
A) interest payments on the national debt. B) unemployment compensation. C) Social Security payments to retired persons. D) government payments to war veterans.
Which of the following statements is true about the high rate of mortgage defaults that contributed to the financial crisis of 2007 and 2008?
A. High interest rates on mortgage loans were the primary cause of defaults. B. The high rate of defaults occurred despite the efforts of government to discourage new home ownership and slow the growth of the housing bubble. C. Prior to the rise in defaults, banks had become lax in their lending practices, resulting in a large number of bad loans. D. The high rate of defaults resulted primarily from the two years of recession preceding the mortgage default crisis.