Suppose Economists Were Able to Measure Frictional Unemployment as 3

question 50

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 the NAIRU is and the actual unemployment rate is .

• A)6 percent; 5 percent
• B)5 percent; 9 percent
• C)7 percent; 9 percent
• D)6 percent; 6 percent
• E)7 percent; 7 percent

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Definitions:

Glass-Steagall Act

A U.S. law enacted in 1933, designed to prevent commercial banks from engaging in investment banking, thereby protecting depositor funds from risky market investments.

Investment Banking

The sale of stocks and bonds for corporations.

Discount Rate

The interest rate charged to commercial banks and other financial institutions for loans received from the central bank.