Question

1) In the U.S., high employment is defined as: A. An unemployment rate near zero to...

1) In the U.S., high employment is defined as:

A.

An unemployment rate near zero to be sure that we are producing and employing near our potential.

B.

An unemployment rate no lower than 4-5% of the labor force so as to prevent an outbreak of inflation.

C.

An unemployment rate between 2-3% of the labor force to make sure that we are providing jobs for all who wish to work.

D.

An unemployment rate of 4-5% to prevent the crime rate from rising.

E.

An unemployment rate of 2-3% to prevent recessions.

2) The macro policy to keep recessions short and mild is:

A.

A mix of contractionary monetary policy and contractionary fiscal policy to decrease demand to induce businesses to increase their production and employment.

B.

A mix of expansionary monetary policy and contractionary fiscal policy to decrease demand to induce businesses to increase their production and employment.

C.

A mix of contractionary monetary policy and expansionary fiscal policy to increase demand to induce businesses to increase their production and employment.

D.

A mix of contractionary monetary policy and contractionary fiscal policy to increase demand to induce businesses to increase their production and employment.

E.

A mix of expansionary monetary policy and expansionary fiscal policy to increase demand to induce businesses to increase their production and employment.
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Answer #1

1. The high employment or full employment rate in USA is the any unemployment rate between 5% or less to contain inflation in the economy. Therefore, correct answer is B. A mix of expansionary monetary policy and contractionary fiscal policy to decrease demand to induce businesses to increase their production and employment.

2. The macro policy to keep the recessions in control is expansionary monetary policy and expansionary fiscal policy that would boost economic growth, employment and demand. Therefore, the correct answer is E. A mix of expansionary monetary policy and expansionary fiscal policy to increase demand to induce businesses to increase their production and employment.

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