Exam 8: Potential Gdp and the Natural Unemployment Rate

France offers its citizens generous unemployment benefits for up to 24 months.The United States offers its citizens less generous unemployment benefits for up to 6 months.From this information, it is likely that the natural unemployment rate is

-In the above figure, an ________ would be set ________.

The production function graphs the relationship between

Which of the following can result in job rationing? i. minimum wage ii. union wage iii. diminishing returns

What is the effect of an increase in unemployment benefits on the unemployment rate?

Quantity of labor demanded Real wage rate (billions of hours (2005 dollars) Quantity of labor supplied (billions of hours per year) 50 80 100 40 90 90 30 100 80 20 110 70 10 120 60 Employment (billions Real GDP of hours (billions of per year) 2005 dollars) 60 2.0 70 3.0 80 3.7 90 4.2 110 4.5 -The tables above show a nation's labor demand and labor supply schedules and its production function.Given the equilibrium in the labor market, potential GDP is

If New Zealand is operating at potential GDP, which of the following is true? i. New Zealand only has frictional and structural unemployment. ii. There is no inflation in New Zealand. iii. New Zealand has positive net exports.

Structural change influences the unemployment rate and such structural change is created by changes in

Explain how some structural changes can increase the natural unemployment rate while other structural changes can decrease the natural unemployment rate.

Real wage rate Quantity of labor demanded (2005 dollars (millions of hours per hour) Quantity of labor supplied (millions of hours per month) 7.15 90 25 7.65 70 32 8.00 60 60 8.50 45 70 9.00 20 85 -The table above gives the labor market for a small foreign economy.Equilibrium in the labor market occurs at a real wage rate of

The labor force participation rate

Which of the following statements is (are) true? i. As the real wage rate increases, the household's income decreases, which influences people to work more hours. ii. As the real wage rate increases, the quantity of labor demanded increases. iii. As the real wage rate increases, the opportunity cost of not working increases.

According to the production function, as the quantity of labor employed increases, real GDP increases

If the minimum wage rate is set above the equilibrium wage rate, then

Choose which statement is most correct.

The presence of union wages leads to

"Job rationing occurs when the quantity of labor demanded exceeds the quantity supplied." Is the previous statement true or false? Explain your answer.

The Monetarist model expands the Keynesian model by proposing that

Potential GDP is

An increase in the real wage rate ________ the quantity of labor demanded and ________ the quantity of labor supplied.