If the unemployment rate in an economy is 12%, of which 5% is cyclical unemployment, 4% is structural unemployment, and 3% is frictional unemployment, what is the natural rate of unemployment?
What will be an ideal response?
The natural rate of unemployment is equal to frictional unemployment plus structural unemployment, so the natural rate of unemployment is: (4% + 3%) = 7%.
Economics
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The table above gives data for the nation of Pearl, a small island in the South Pacific. If aggregate demand increases so that the quantity of real GDP demanded is $6 billion more at each price level, the new equilibrium real GDP is
A) $34 billion. B) $31 billion. C) $28 billion. D) $25 billion. E) $23 billion.
Economics
A decrease in expected inflation will
A) increase the natural rate of unemployment. B) shift the short-run Phillips curve to the left. C) shift the long-run Phillips curve to the left. D) reduce real wages.
Economics