If the NAIRU Is 8% and the Actual Unemployment Rate

question 76

Multiple Choice

If the NAIRU is 8% and the actual unemployment rate is 5%,

• A)there is no pressure on the AS curve to shift.
• B)there is a recessionary gap.
• C)demand forces put upward pressure on wages.
• D)the AS curve will shift downward.
• E)it will get stuck there permanently.

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Definitions:

External Costs

Costs of a transaction or activity that affect third parties who did not choose to incur that cost, often seen in environmental pollution.

Competitive Market

A market structure characterized by a large number of buyers and sellers, free entry and exit, and a product for which there are many substitutes.

External Benefit

A benefit that people other than the consumer or producer enjoy, resulting from a transaction or activity.

Economic Efficiency

A condition in which all available resources are utilized in the most effective manner to satisfy society's needs and wants, minimizing waste and maximizing value.