At the peak of a business cycle, the
A) cyclical unemployment rate is positive.
B) unemployment rate is above the natural unemployment rate.
C) frictional unemployment rate is zero.
D) unemployment rate is below the natural unemployment rate.
E) natural unemployment rate is negative.
D
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Suppose an individual can earn 3 percent interest on an annual term deposit. His opportunity cost of holding $100,000 in cash instead of investing in the term deposit will be: a. $3,300
b. $330. c. $1,000. d. $6,000. e. $3,000.
Assume General Motors has decided to build an assembly plant in St. Louis. The plant will employ 1,000 full-time workers at an annual wage of $40,000 each. If the marginal propensity to consume in St. Louis is 2/3, what change in income will result from operation of the plant for one year?
A. $26.7 million. B. $40 million. C. $80 million. D. $120 million.