What is meant by full employment? Why isn't the full employment rate zero? What causes frictional unemployment?
What will be an ideal response?
Full employment is the level of unemployment that corresponds to normal friction in the labor market. Since a dynamic economy will always experience changes in demand for goods and services, there will always be some frictional unemployment. Frictional unemployment refers to the unemployment resulting from the time people spend between jobs, looking for other work.
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Price ceilings sometimes result in some buyers and sellers purchasing the good at prohibited prices
Indicate whether the statement is true or false
How do we measure economic growth?
A. increases in the price level, as indicated by the GDP chain price index B. increases in nominal GDP C. increases in real GDP D. increases in the labor force
How do economic profits and losses allocate resources in an economy?
What will be an ideal response?
Imagine that the economy is at a point that is above both AA and DD, where both the output and asset markets are out of equilibrium. Which first action is TRUE?
A) The economy will stay at this level in the short run. B) The exchange rate will first drop to a point on the AA schedule. C) The exchange rate will first move to a point on the DD schedule. D) The AA-DD equilibrium will shift to the position of the economy. E) The exchange rate will first move left to a position on the AA schedule.