CHAPTER 28

To maintain their standard of living, most people rely on

A. government assistance.

B. their personal savings.

C. their labor earnings.

D. rental income.

• A

• B

• C

• D

To maintain their standard of living, most people rely on

A. government assistance.

B. their labor earnings.

C. their personal savings.

D. All of the above are correct.

• A

• B

• C

• D

Which of the following is correct?

• The amount of unemployment that a country typically experiences is a determinant of that country's standard of living, and some degree of unemployment is inevitable in a complex economy.

• The amount of unemployment that a country typically experiences is a determinant of that country's standard of living, and a complex economy can achieve zero unemployment.

• The amount of unemployment that a country typically experiences is not a determinant of that country's standard of living, and a complex economy can achieve zero unemployment.

• The amount of unemployment that a country typically experiences is not a determinant of that country's standard of living, and some degree of unemployment is inevitable in a complex economy.

The amount of unemployment varies

A. little over time and across countries.

B. little over time but substantially across countries.

C. substantially over time but little across countries.

D. substantially over time and across countries.

• A

• B

• C

• D

The amount of unemployment that an economy normally experiences is called the

A. average rate of unemployment.

B. natural rate of unemployment.

C. cyclical rate of unemployment.

D. typical rate of unemployment.

• A

• B

• C

• D

The natural rate of unemployment is the

• unemployment rate that would prevail with zero inflation.

• rate associated with the highest possible level of GDP.

• difference between the long-run and short-run unemployment rates.

• amount of unemployment that the economy normally experiences.

In the long run the unemployment rate equals

• zero.

• the cyclical rate of unemployment.

• the natural rate of unemployment.

• the sum of the cyclical and natural rate of unemployment.

Cyclical unemployment refers to

• the portion of unemployment created by job search.

• short-run fluctuations around the natural rate of unemployment.

• changes in unemployment due to changes in the natural rate of unemployment.

• the portion of unemployment created by wages set above the equilibrium level.

Cyclical unemployment is closely associated with

• long-term economic growth.

• short-run ups and downs of the economy.

• fluctuations in the natural rate of unemployment.

• changes in the minimum wage.

The designation "natural" implies that the natural rate of unemployment

• is desirable.

• is constant over time.

• is impervious to economic policy.

• does not go away on its own even in the long run.