Knightian Uncertainty Is an Expression Used When Discussing Uncertainty

question 36

Multiple Choice

Knightian uncertainty is an expression used when discussing uncertainty. It means that:

• A) we are uncertain where we should or wish to be headed
• B) we don't know which circumstantial conditions are important
• C) consequences cannot be assigned probability and cannot be calculated

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Definitions:

Unemployment

The condition of being jobless and actively seeking employment, often measured as a percentage of the labor force.

Price Level

refers to the average of current prices across the entire spectrum of goods and services produced in the economy, often associated with inflation measurements.

Potential Output

refers to the maximum amount of goods and services an economy can produce when it is operating at full capacity, without causing inflation.

Velocity of Money

The rate at which money circulates in an economy, typically measured as the ratio of nominal GDP to the money supply.