Explain what economists mean by full employment and why this rate of unemployment is not zero
What will be an ideal response?
Full employment occurs in the macro economy when cyclical unemployment is zero. The full-employment rate of unemployment is then made up of the frictional rate of unemployment and the structural rate of unemployment. Because it will always take time to find a job, frictional unemployment will never be zero. Also because demand and technology are constantly changing in an economy, structural unemployment will never be zero. That is, some workers will always lose their jobs as the demands for the products they make fall or disappear entirely.
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The ability of an individual, firm, or country to produce a certain good at a lower opportunity cost than other producers is referred to as:
A) marginal advantage. B) absolute advantage. C) cardinal advantage. D) comparative advantage.
To the extent that high incomes can be attributed to very high demand for very scarce abilities, the labor supply effects of a substantial increase in the tax rate
a. will be zero as long as the labor supply curve is vertical. b. will be significant because the demand curve is fixed. c. cannot be predicted because the substitution and income effects offset each other. d. will be zero as long as there is no economic rent in the income.