The natural rate of unemployment
A. means that the economy will always operate at that rate.
B. is a fixed unemployment rate that does not change over time.
C. means that the economy will always realize its potential output.
D. is equal to the total of frictional and structural unemployment.
Answer: D
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One difficulty in using voluntary transactions to internalize externalities is that
A) people are motivated by self-interest and are often unwilling to engage in a transaction that might make another person better off. B) the government usually will not enforce contracts of this type. C) transaction costs of coming to an agreement can be very large when numerous people are involved. D) people usually don't understand what the real opportunity costs are that they face.
As the level of real interest rates rise, the amount of new investment will rise also
a. True b. False Indicate whether the statement is true or false
Bethany notices that whenever she receives a text message, her roommate Stella is playing her tuba. She concludes that Stella's tuba playing is causing her to receive text messages. Bethany is
A. likely correct that there is causation, but the causation is more likely running in the opposite direction in that the text messages are causing Stella to play the tuba. B. probably misguided in that there is no apparent correlation or causation in this situation. C. very probably correct in her conclusion that the tuba playing causes her to receive text messages. D. definitely confusing correlation with causation.
By analyzing aggregate demand through its component parts, we can conclude that, everything else held constant, a decline in the inflation rate causes
A) an increase in real interest rates, an increase in investment spending, and a decline in aggregate output demand. B) a decline in real interest rates, a decrease in investment spending, and an increase in aggregate output demand. C) a decline in real interest rates, an increase in investment spending, and an increase in aggregate output demand. D) an increase in real interest rates, a decline in investment spending, and a decline in aggregate output demand.