The Squared Deviation of Unemployment from the Natural Rate Is

question 26

Multiple Choice

The squared deviation of unemployment from the natural rate is used as a measure of "output loss" because

• A) both positive deviations and negative deviations are costly.
• B) policy can influence only the degree of fluctuation of an economy around potential GDP and thus of unemployment around the natural rate; squared deviations are a measure of that fluctuation.
• C) it is a convenient measure that is routinely reported as output from statistical investigations.
• D) all of the above.
• E) none of the above.

---

Definitions:

Compliance

The act of conforming to a request or demand, often studied in social psychology as a form of social influence.

Group Polarization

Group polarization occurs when discussions within a group lead to an accentuation of the group's initial inclination, often resulting in more extreme positions.

Social Facilitation

The tendency for people to perform differently, usually better, when in the presence of others than when alone.

Social Loafing

Social Loafing is the phenomenon where individuals exert less effort to achieve a goal when they work in a group than when they work alone.