What is the relationship between the natural unemployment rate, the unemployment rate, potential GDP, and actual GDP?
What will be an ideal response?
When the economy is at potential GDP, the unemployment rate is the natural unemployment rate. If actual GDP is less than potential GDP, then the unemployment rate exceeds the natural unemployment rate. And if actual GDP exceeds potential GDP, then the unemployment rate is less than the natural unemployment rate.
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The model of supply and demand leads to the prediction that high interest rates cause:
A. a decrease in both housing prices and the number of homes purchased. B. a decrease in the price of housing and an increase in the number of homes purchased. C. an increase in the price of housing and a decrease in the number of homes purchased. D. an increase in both housing prices and the number of homes purchased.
The quantity supplied of bagels is 100 at the unit price $1. Suppose the price elasticity of supply by the initial value method is 1.5, and you would like to induce sellers to increase the quantity of bagels supplied to 130. Then the new price for bagels must be:
A. $11. B. $10.20. C. $1.20. D. $1.10.