Rick lost his job as a logistics and distribution coordinator nearly three years ago. After a long and failed search, Rick finally gives up and stops looking for a new job
Rick's decision to suspend his job search causes the unemployment rate to ________ and the labor force participation rate to ________. A) increase; decrease
B) decrease; decrease
C) stay the same; decrease
D) increase; stay the same
E) increase; increase
B
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A Comparison of Macroeconomic Views
Suppose there are only two kind of cars in the market for used cars: lemons and good cars. A lemon is worth $1,000 both to its current owner and to anyone who buys it. A good car is worth $8,000 to its current and potential owners
Buyers can't tell whether a car is a lemon until after they have bought the car, and there is no warranty. What is the prevailing price of a used car? A) $8,000 B) $1,000 C) $4,500 D) The prevailing price depends on how many lemons and how many good cars are traded.
In the simple Keynesian framework, declines in planned investment spending that produce high unemployment can be offset by raising
A) taxes. B) government spending. C) consumer confidence. D) business confidence.
What is precautionary saving? What might cause precautionary saving to increase or decrease if households have a desired level of wealth?
What will be an ideal response?