With Everything Else Held Constant, If 5% of Those Considered

question 178

Multiple Choice

With everything else held constant, if 5% of those considered to be frictionally unemployed found work while the number of people considered to be structurally unemployed increased by 5%, the natural rate of unemployment

• A) increases by 10%.
• B) decreases by 10%.
• C) equals the unemployment rate.
• D) does not change.

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Definitions:

Abnormal Returns

Abnormal returns refer to the profits generated from a security or portfolio that differ significantly from the expected market returns, based on risk and market performance.

Positive Abnormal Returns

Returns on an asset or portfolio that exceed the benchmark or expected return given its risk level.

Vanguard Index 500

A mutual fund that aims to mirror the performance of the S&P 500, managed by Vanguard.

Passive Investment

An investment strategy involving minimal buying and selling, aiming to benefit from long-term market returns with low fees.