Which of the Following Conditions Might Cause the Unemployment Rate

question 100

Multiple Choice

Which of the following conditions might cause the unemployment rate to be less than the natural rate of unemployment?

• A) Demand for products starts to decrease,so firms keep their factories open for additional hours of production to make up the difference.
• B) Demand for products is so high that firms keep their factories open for additional hours of production and pay their workers overtime.
• C) Demand for products is so high that firms raise their prices to take advantage of extra profits.
• D) The economy enters a recession,so firms start to produce more to help boost the economy.
• E) The government decreases unemployment benefits.

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Definitions:

Cost of Retained Earnings

This represents the opportunity cost for a company of using its retained earnings for investment purposes rather than distributing them as dividends.

Common Stock

A type of equity security that represents ownership in a corporation, giving holders voting rights and the potential for dividends.

Market Yield

The current rate of return anticipated on a bond if held until maturity, expressed as an annual percentage.

Component Cost

The cost related to each source of capital, such as debt and equity, that a company uses for funding.