Log in
Economics
1
answer
0
watching
83
views

Which of the following is true when an economy is operating at its full employment rate of output?

a. The rate of unemployment will be zero.
b. The actual rate of unemployment will equal the natural rate.
c. The economy's potential rate of output will exceed the actual GDP.
d. The output will exceed the economy's maximum sustainable rate.

Watch
1
answer
0
watching
83
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Richa Arora
Richa AroraLv10
29 Aug 2020

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related textbook solutions

Principles of Economics
2nd Edition, 2017
Openstax
ISBN: 9781947172364
Principles of Macroeconomics
2 Edition,
Openstax
ISBN: 9781947172388
Principles of Microeconomics
2 Edition,
Openstax
ISBN: 9781947172340

Related questions

The rate of unemployment when the economy is at its potential output is called ______________.

a. Structural rate of unemployment

b. Frictional rate of unemployment

c. Natural rate of unemployment

d. Full-employment rate of unemployment

Consider a hypothetical economy in which the labour force consists of 100 people. Of those, 85 people are employed full time and 15 people are unemployed. The government of this economy follows the same conventions as the BLS in computing its employment figures. The unemployment rate is simply the number of unemployed people divided by the number of people in the labour force. Initially, then, the unemployment rate is (15/100) x 100% = 15.0%
 
Suppose a reduction in foreign demand for this economy's products causes an economic recession-a prolonged period of declining output. The following table offers two different possible scenarios resulting from the recession. Calculate the unemployment rate associated with each scenario
 
2. Firms reduce work hours by 25%. The number of underemployed workers rises as firms respond to the reduction in the demand for their products by reducing the hours of each employed person from 40 to 30 hours per week.
 
A. 36.0%
B. 56.3%
C. 15.0%
D. 17.6%
 
3. Firms reduce employment by 25%. The number of unemployed workers rises as firms respond to the reduction in the demand for their products by laying off 21 previously employed workers.
 
A. 15.0%
B. 36.0%
C. 56.3%
D. 17.6%
 
4. The unemployment rate in scenario 3 ____ the true extent of underemployment in the economy because the BLS counts part-time workers as employed.
 
A. Overstates
B. Understates
 
5. Consider a hypothetical economy in which potential output is $400 billion and the natural rate of unemployment is 6%. The current employment rate is 7.4%. Since the unemployment rate is greater than the natural rate of unemployment, the economy's actual GDP will be ____ potential GDP.
 
A. Less than
B. Greater than
C. Equal to
 
6. The burden of an increase in the economy-wide unemployment rate can differ widely across regions and different groups of people. For example, in the United States, the jobless rate among minorities has tended to be ___ than the jobless rate among whites.
 
A. Lower
B. Higher

If the price level in the current period is higher than buyers and sellers anticipated, what will tend to happen to real wages and the level of employment? How will the profit margins of businesses be affected? How will the actual rate of unemployment compare with the natural rate of unemployment? Will the current rate of output be sustainable in the future? Why or why not?

Weekly leaderboard

Home
Homework Help 3,900,000
Economics 400,000
Start filling in the gaps now
Log in