Suppose Economists Were Able to Measure Frictional Unemployment as 3%,cyclical

question 31

Multiple Choice

Suppose economists were able to measure frictional unemployment as 3%,cyclical unemployment as 2%,and structural unemployment as 4%.Then we would know that

• A)Y is below Y* and there is downward pressure on wages.
• B)Y is below Y* and there is upward pressure on wages.
• C)Y is equal to Y* and there is no pressure on wages.
• D)Y is above Y* and there is downward pressure on wages.
• E)Y is above Y* and there is upward pressure on wages.

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Definitions:

Marginal External Cost

The additional cost to society that arises from one more unit of a good being produced, not considered by the producer.

Optimal Fee

The best possible charge for a service or product that maximizes profit without discouraging consumers from buying.

Profitability

The degree to which a business or activity yields profit or financial gain.

Marginal Benefit

The additional satisfaction or utility that a person receives from consuming one more unit of a good or service.