If cyclical unemployment is negative, then
A. the natural rate of unemployment is getting smaller.
B. the actual unemployment rate is below the natural rate of unemployment.
C. there have been some errors in classifying the type of unemployment experienced by some people.
D. structural unemployment must be increasing.
Answer: B
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Given a 25 percent reserve ratio, assume the commercial banking system is loaned up. Now assume the reserve ratio is reduced to 20 percent. As a result of this reduction:
A. we can expect bank lending and bank profits to decline. B. each dollar of bank reserves will now support a maximum of $5 of checkable deposits. C. the banking system must now reduce outstanding loans by 5 percent. D. the banking system can now increase lending by 5 percent.
How are total costs determined?
a. fixed costs x output b. sunk costs + variable costs c. fixed costs + variable costs d. marginal costs / output