Suppose Economists Were Able to Measure Frictional Unemployment as 3

question 23

Multiple Choice

Suppose economists were able to measure frictional unemployment as 3 percent, cyclical unemployment as 2 percent, and structural unemployment as 4 percent. Then we would know that

• A)Y is below Y* and there is downward pressure on wages.
• B)Y is above Y* and there is upward pressure on wages.
• C)Y is equal to Y* and there is no pressure on wages.
• D)Y is above Y* and there is downward pressure on wages.
• E)Y is below Y* and there is upward pressure on wages.

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Definitions:

Monopolistic Competitor

A market structure in which many firms offer products or services that are similar, but not perfect substitutes, allowing for some degree of market power and price setting.

Significant Barriers

Major obstacles or impediments that prevent new competitors from easily entering an industry or area of business.

Economic Profits

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs, resulting in surplus gain.

Product Variety

The diversity of different items a firm, industry, or economy produces, providing consumers with multiple options to satisfy their preferences.