If an Economy Is Operating at Short-Run Equilibrium Below the Full-Employment

question 42

Multiple Choice

If an economy is operating at short-run equilibrium below the full-employment level of real GDP, the self-correction model result is that :

• A) unemployment increases.
• B) unemployment falls.
• C) cyclical unemployment increases.
• D) frictional and structural unemployment increase.

---

Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed, which can vary according to income or profits.

Coupon

The interest rate paid by a bond, typically expressed as a percentage of the bond's face value.

Unlevered Cost

It involves the cost of funding a project or investment without any debt, reflecting the cost of capital that is equity financed.

Coupon

The yearly interest percentage paid on a bond, relative to its face value.