Which Is True Regarding Cyclical Unemployment

question 275

Multiple Choice

Which is true regarding cyclical unemployment?
I.Cyclical unemployment is positive at business cycle peaks.
Ii.Cyclical unemployment is negative at business cycle troughs.
Iii.Cyclical unemployment is zero at full employment.

• A)iii only
• B)i,ii and iii
• C)i and iii
• D)i only
• E)i and ii

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Definitions:

Liquidity Preference Theory

A theory that suggests individuals prefer to have their resources in liquid form as opposed to investing in long-term assets, affecting interest rates and economic activity.

Money Demanded

The total amount of money that households and businesses wish to hold at any given interest rate, at a specific time.

Federal Funds Rate

The interest rate at which banks lend reserves to each other overnight, serving as a key monetary policy tool of the Federal Reserve.

Open-Market Operations

The purchase and sale of U.S. government bonds by the Fed.