Question

Question 25 (1 point)

Which of the following statements is true?

a	Cyclical unemployment is caused by changes in weather conditions, tourist patterns, and other seasonal factors.
b	Seasonal unemployment is caused by a recession. As firms respond to low demand for their goods and services, output and employment fall.
c	Very high unemployment during the Great Depression (25% in 1933) is significantly explained by cyclical unemployment.
d	All of the above.
e	Only a) and b)

Question 26 (1 point)

Which of the following statements is true?

a	Full employment does not mean zero unemployment, but it does mean that cyclical unemployment is zero.
b	Most economists agree that when the (official) unemployment rate is 4%, the economy has full employment and is thus producing the potential level of output.
c	The 4% unemployment rate is explained by the fact that, even when the economy is doing very well, there is always some frictional, structural and seasonal unemployment, because these types of unemployment are always occurring and are a natural part of our economy.
d	All of the above.
e	Only a) and b)

Question 27 (1 point)

Which of the following statements is true?

a	The full-employment unemployment rate is also referred to as the natural rate of unemployment (NRU).
b	The natural rate (of unemployment) is achieved when labor markets are in-balance; that is, when the number of job seekers equals the number of job vacancies.
c	The natural rate of unemployment cannot change and is the same for all countries.
d	All of the above.
e	Only a) and b)

Answer 1

25. Very high unemployment during the great depression is significantly explained by cyclical unemployment. Unemployment caused due to changes in business cycles is known as cyclical unemployment.

26. Full employment does not mean zero unemployment, but it does mean that cyclical unemployment is zero. Full employment is the sum of frictional and structural unemployment. A deviation from the natural unemployment is caused by the existance of cyclical unemployment.

27. Only a and b