Holding other factors constant, decreasing the amount and duration of unemployment benefits would likely
A) decrease cyclical unemployment and the natural rate of unemployment.
B) increase structural unemployment and the natural rate of unemployment.
C) increase frictional unemployment and the natural rate of unemployment.
D) decrease the natural rate of unemployment.
D
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Employing the New Keynesian concepts of "macroeconomic externality" and "coordination failure":
if nominal aggregate demand and marginal cost fall by the same proportion, society ________ afford to compensate firms for the profit they lose when they ________. A) can, bear the menu costs of changing prices B) can, hold prices constant C) cannot, bear the menu costs of changing prices D) cannot, hold prices constant
An increase in Social Security payments to retired persons has what effect on equilibrium income?
a. GDP will fall. b. GDP will rise. c. GDP will remain the same. d. GDP will fall by less than the increase in payments.