Suppose the economy is experiencing frictional unemployment of 1 percent, structural unemployment of 3 percent and cyclical unemployment of 4 percent. What is the natural unemployment rate?
A) 3 percent
B) 4 percent
C) 5 percent
D) 7 percent
B
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Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
Suppose that during a given month 200,000 persons who had been self-employed leave their business and get jobs working for other businesses. This might give __________ bias to the __________ indicator
A) an optimistic; unemployment rate B) a pessimistic; unemployment rate C) an optimistic; payroll employment D) a pessimistic; payroll employment
A change in demand for milk is caused by a change in the price of milk
Indicate whether the statement is true or false
Answer the following statement(s) true (T) or false (F)
1. Government policies play only a limited role in stabilizing the economy. 2. All else being the same, an increase in population would lower the standard of living because more people would be sharing the same output of goods and services. 3. Economic growth rates provide a good measure of the distribution of output and income. 4. Productivity growth rates are higher in countries that provide incentives for innovation and investment in research and development.