Suppose That the Unemployment Rate Equals 4

question 196

Multiple Choice

Suppose that the unemployment rate equals 4.5 percent and that the natural unemployment rate is 5.5 percent. We can conclude that

• A) the output gap is negative.
• B) the output gap equals zero.
• C) the output gap is positive.
• D) we have mismeasured the natural unemployment rate.

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Definitions:

Premium

The amount paid for an insurance policy.

Face Value

The nominal or stated value of a security or financial instrument, such as a bond, note, or coin.

Taxable Income

Earnings that are taxable.

Medicare Tax

The amount of Medicare tax an employee pays is a set percentage of the entire income with no maximum amounts; the amount paid is split between the employee and employer.