Attempts to fine-tune the economy through shifts in fiscal and monetary policy
A) cannot alter the level of unemployment but may change the price level.
B) may not do any good but certainly do no harm.
C) produce greater stability, but only at the cost of an ever-increasing national debt.
D) will increase rather than reduce instability if the policy makers lack adequate information.
D
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An example of how trade diversion results in a suboptimal situation is auto parts trade between Mexico and the United States. After NAFTA:
a. Mexico decreased its sales of auto parts to the United States. b. the United States purchased more auto parts from Mexico due to the elimination of tariffs and reduced purchases from East Asia, which was the lowest-cost producer. c. the United States brought a complaint against Mexico for low quality auto parts. d. the United States purchased fewer auto parts from Mexico due to the elimination of tariffs and increased purchases from East Asia, which was the lowest-cost producer.
Suppose the population is 300 million people, the labor force is 200 million people, the number of people employed is 185 million, and the working-age population is 170 million people. What is the unemployment rate?
A) 8.8 percent B) 5 percent C) 20 percent D) 7.5 percent E) 92.5 percent