When the economy is at full employment the unemployment rate equals the natural unemployment rate
Indicate whether the statement is true or false
TRUE
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Starting from long-run equilibrium, a decrease in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. higher; potential D. lower; higher
Assume the cost of certain inputs used to produce artificial Christmas trees increases and, at the same time, the economy moves into a recession, causing the incomes of consumers to decrease
Which of the following will happen to the equilibrium price and quantity of artificial Christmas trees? (Assume artificial Christmas trees are normal goods.) A) Price will increase; quantity cannot be determined. B) Price will decrease; quantity cannot be determined. C) Quantity will increase; price cannot be determined. D) Quantity will decrease; price cannot be determined.
If the economy is experiencing unemployment, then the most appropriate government policy would be to:
a. shift the aggregate demand curve by using a tax increase coupled with spending cuts. b. shift the aggregate demand curve by using a tax increase coupled with more spending. c. shift the aggregate demand curve by using a tax cut coupled with spending cuts. d. shift the aggregate demand curve by using a tax cut coupled with more spending. e. shift the aggregate supply curve by using a tax cut coupled with spending cuts.
The federal government, in order to fund expanded health care, imposes a lump-sum tax on all business property. Profit-maximizing firms that stay in business will respond by
a. raising prices to pay the tax. b. cutting output to reduce costs. c. lowering prices to stimulate demand. d. doing nothing.