Question

Real-wage unemployment is:

• the effect of wages remaining persistently above the market-clearing level.

• also called cyclical unemployment.

• unemployment caused by workers who are changing their location, job, or career.

• a mismatch between the skills workers can offer and the skills that are in demand.

3)

When PAE < Y the economic response for inventories should be:

• inventories will decrease.

• inventories will increase.

• there will be no change in inventories.

• inventories should decrease initially and then sharply increase.

4)

What types of capital can improve the productivity of workers?

• Physical and technological

• Technological and human

• Human and physical

• Human, technological, and physical capital are all determinants of productivity

Answer 1

2)A.....the effect of wages remaining persistently above the market-clearing level...............Classical unemployment or Real wage unemployment occurs when real wages are kept above the market-clearing wage rate, leading to a surplus of labour supplied.

3)B.... inventories will increase..... because,if planning aggregate expenditure is less than aggregate income,firm's will be left with more inventories.

4)D......Human, technological, and physical capital are all determinants of productivity.......... because, Growth in labor productivity depends on three main factors: saving and investment in physical capital, new technology, and human capital.