A central concept in macroeconomics is the idea of the natural rate of unemployment
Why does it make sense to define full employment to occur when the unemployment rate equals the natural rate of unemployment, instead of when the unemployment rate equals zero? Elaborate and explain carefully.
With a growing, dynamic economy where businesses expand and contract, technological change regularly occurs, and people enter and leave the labor market on a continual basis, zero percent unemployment is not possible nor desirable. Frictional unemployment and structural unemployment are normal parts of a healthy, growing economy. With frictional unemployment, people and firms have to search for one another and that takes time. With structural unemployment, technology changes and international competition cause people to have to retrain to match up with the evolving job requirements. Economists, consequently, consider full employment to occur when the only unemployment is frictional unemployment and structural unemployment.
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A model's predictions are referred to as:
A) statistics. B) theories. C) hypotheses. D) empirical evidences.
An increase in the level of total factor productivity will lead to
A) an increase in the capital-labor ratio and an increase in real GDP worker. B) an increase in investment and a decrease in depreciation. C) an upward shift of the break-even investment line and an increase in the capital-labor ratio. D) a higher rate of dilution and lower break-even investment.
A recessionary gap exists when the level of full-employment output exceeds the equilibrium level of output
Indicate whether the statement is true or false
If a 20 percent increase in the price of a good results in a 60 percent increase in the demand for another good, what is the cross-price elasticity of demand?
a. +3 b. –3 c. +80 d. –40