Why does unemployment not go to zero during booms?
What will be an ideal response?
While unemployment has a cyclical component—that is, it naturally goes up during recessions as people are laid off and down during booms as people are hired—there are other components of unemployment that do not vary over the business cycle. For instance, some people are going to be transitioning between jobs at all times of the business cycle (this is frictional unemployment). Frictional and structural unemployment rates are nonzero, so "full employment" actually means that some people are unemployed all the time.
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Suppose farmers in a given market can either grow soy beans or corn on their land. In addition, suppose an increase in the demand for corn causes the price of corn to increase. As a result of the increase in the price of corn, farmers who were already growing corn will earn an:
A. economic loss in the short run. B. economic profit in the long run. C. economic loss in the long run. D. economic profit in the short run.
Which of the following is likely to happen due to quantitative easing by the Fed?
A) A rightward shift of the demand curve for bank reserves B) A leftward shift of the supply curve of bank reserves C) A leftward shift of the demand curve for bank reserves D) A rightward shift of the supply curve of bank reserves
A copyright gives an inventor the exclusive right to make, sell, or use an invention for a limited time
a. True b. False Indicate whether the statement is true or false
In the short run, a country's exchange rate is determined by:
A. supply and demand. B. monetary policy. C. purchasing power parity. D. the domestic inflation rate.