The natural rate of unemployment is the amount of unemployment
A. that exists when the economy goes into recession.
B. equal to cyclical unemployment.
C. that exists when the economy is in an expansion.
D. equal to frictional plus structural unemployment.
Answer: D. equal to frictional plus structural unemployment.
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Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls, and reserve-related (central bank) transactions remain the same. b. The quantity of real loanable funds per time period rises, and reserve-related (central bank) transactions become more positive (or less negative). c. The quantity of real loanable funds per time period falls, and reserve-related (central bank) transactions become more negative (or less positive). d. The quantity of real loanable funds per time period rises, and reserve-related (central bank) transactions remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
If you would have to pay $5,000 in taxes on a $25,000 taxable income and $7,000 on a $30,000 taxable income, then the marginal tax rate on the additional $5,000 of income is:
A. 40 percent and the average tax rate is about 23 percent at the $30,000 income level. B. 50 percent and the average tax rate is 40 percent at the $30,000 income level. C. 40 percent and the average tax rate is 25 percent at the $25,000 income level. D. 30 percent, but average tax rates cannot be determined from the information given.