Consider an economy with a labor force of 200 million people of which 180 million are employed while 20 million are unemployed. Each period, 45% of the unemployed population finds a job. If the economy is in a steady-state of unemployment, what percent of the employed population lose their job each period?
A. 15%
B. 5%
C. 25%
D. 20%
E. 10%
Answer: B
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A. is a temporary maximum point. B. is a temporary minimum point. C. occurs when the inflation rate is its lowest. D. occurs when the unemployment rate is its greatest.
In an increasing cost industry, the long-run supply curve is
a. positively sloped. b. negatively sloped. c. horizontal. d. vertical.
Diversification involves:
A. buying only one kind of stock. B. buying only low-risk bonds. C. investing all your money in one company. D. None of these statements is true.
If the Federal Reserve increases the money supply, then initially people want to
a. sell bonds so the interest rate rises. b. sell bonds so the interest rate falls. c. buy bonds so the interest rate rises. d. buy bonds so the interest rate falls.