Suppose the Full-Employment Equilibrium Real Wage Rate Is $11 Per

question 3

Multiple Choice

Suppose the full-employment equilibrium real wage rate is $11 per hour while the actual real wage rate is $12 per hour. If the actual real wage rate does not change, then

• A)job rationing will occur.
• B)job search will decline.
• C)job rationing will decrease.
• D)the production function will shift downward.
• E)a positive Okun Gap will occur.

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Definitions:

Effective Annual Rate

A measure of interest that accounts for compounding over a year, giving a true reflection of the financial cost or return.

Annual Percentage Rate

The annual rate charged for borrowing or earned through an investment, accounting for all costs.

Interest

The cost of using borrowed money, paid by the borrower to the lender, typically expressed as a percentage of the principal sum per year.

Stated Rate

The annual interest rate of a bond or loan without adjusting for compounding or other factors, often differing from the effective rate or annual percentage rate (APR).