For most years since 1980, the natural unemployment rate was higher in Canada than in the United States. What possible explanation for some of this difference has been suggested?
What will be an ideal response?
Quite likely unemployment benefits are at least part of the reason why the natural unemployment rate has been higher in Canada than in the United States. Canada has more generous and more widely available unemployment benefits than the does the United States. This difference gives workers in Canada the incentive to search longer for jobs, which raises the natural unemployment rate in Canada.
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If people accurately speculate that a run on one bank will result in a run on all banks, the financial system would experience what is known as a
A) financial death spiral. B) clearinghouse collapse. C) bank panic. D) commodity crisis.
If a business firm operates indefinitely without covering any of its sunk costs, what happens to the firm's sunk costs?
A) Nothing happens to them; they have ceased to exist. B) They are distributed across the whole economy. C) They continue unpaid for as long as the firm fails to make a profit large enough to cover them. D) They reduce the wealth of the investors who risked their wealth to make mistaken decisions possible.
The money demand curve shifts to the right when
a. there is an increase in the riskiness of interest-bearing assets. b. there is a decrease in the interest rate. c. income decreases. d. income increases. e. both a and d.
A price floor that is set below the equilibrium price
A) causes suppliers to lower their prices. B) is binding. C) is non-binding. D) creates a shortage.