If the Unemployment Rate Falls Below the Natural Rate of Unemployment

question 79

Multiple Choice

If the unemployment rate falls below the natural rate of unemployment (u*) ,

• A) the government will want to conduct expansionary fiscal policy.
• B) the Federal Reserve will want to conduct expansionary monetary policy.
• C) the economy is in a recession.
• D) there will be no worries about inflation.
• E) the government will want to conduct contractionary fiscal policy.

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Definitions:

Prejudice

A preconceived opinion or judgment about an individual or group without sufficient knowledge, factual basis, or experience, often leading to discrimination.

Stereotypes

Oversimplified generalizations about a group of people that often lead to prejudiced attitudes and discrimination.

Secondary Labour Market

Part of the job market consisting of low-paying jobs with poor working conditions, limited job security, and few prospects for advancement.

Fringe Benefits

Additional benefits supplementing an employee's salary, such as health insurance, paid vacations, and retirement plans, which are not part of the direct wages.