If the Natural Unemployment Rate Is 7 Percent and the Current

question 130

Multiple Choice

If the natural unemployment rate is 7 percent and the current unemployment rate is 5 percent,then the economy is

• A) producing a level of Real GDP that is greater than the level of natural Real GDP.
• B) in a recessionary gap.
• C) producing a level of Real GDP that is less than the level of natural Real GDP.
• D) a and b
• E) b and c

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Definitions:

Equity Multiplier

A financial leverage ratio that measures the portion of a company's assets that are financed by shareholders' equity.

Debt-to-equity Ratio

The ratio that demonstrates the comparative financing from shareholders' equity and debt for a company's assets.

Times Interest Earned Ratio

The Times Interest Earned Ratio measures a company's ability to meet its debt obligations by comparing its income before interest and taxes to its interest expenses.

Dividend Yield Ratio

A ratio that shows the annual dividends a company distributes in relation to its stock price.