In Macroland, potential output equals $100 trillion and the natural rate of unemployment is 4 percent. If the actual unemployment rate is 3 percent, then the output gap equals:
A. ?2 percent.
B. 1 percent.
C. ?1 percent.
D. 2 percent.
Answer: D
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When a currency depreciates, its value has
A) been fixed against the value of another country. B) fallen against another currency. C) remained constant against that of another currency. D) risen against another currency. E) fluctuated around a particular value.
Which of the following is an example of a monopolistically competitive market?
A) The market for wheat B) The market for coffee beans C) The market for shampoo D) The market for premium cars
Workers at a local construction company are paid $32.50 per hour, and they have incorporated a 4 percent annual raise in their contracts to account for expected inflation
Explain how unexpected inflation of 2 percent will affect the real wages earned by these workers and the unemployment rate of these workers.
Many health insurers require a deductible where the policyholder pays the first part of any loss. The use of a deductible most directly treats the problem of:
A. moral hazard. B. people going uninsured. C. adverse selection. D. free riding.