During the Great Depression
A. the U.S. unemployment rate reached its historical highest.
B. the unemployment rate was not unusually high, but wage levels were low.
C. unemployment statistics were not collected.
D. most people who couldn't find work left the labor force, so the official unemployment rate remained low.
Answer: A
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Suppose the U.S. economy is operating at potential output. A negative supply shock that is accommodated by an open market purchase by the Federal Reserve will cause ________ in real GDP in the long run and ________ in inflation in the long run, everything else held constant.
A) no change; an increase B) no change; a decrease C) an increase; an increase D) a decrease; a decrease
The principal factor determining velocity is the
a. level of income. b. frequency with which paychecks are distributed. c. frequency with which taxes are paid. d. growth rate of real output.
Below are pairs of GDP growth rates and unemployment rates. Economists would be shocked to see most of these pairs in the U. S. Which pair of GDP growth rates and unemployment rates is realistic?
a. 5 percent, 1 percent
b. 3 percent, 5 percent
c. -1 percent, 3 percent
d. -2 percent, 4 percent
A policymaker in favor of stabilizing the economy would be likely to believe
a. recessions are a waste of resources.
b. economies must suffer through the booms and busts of the business cycle.
c. the long policy lags make implementing policy changes in response to recession too risky.
d. policy increases the magnitude of economic fluctuations.