The Cyclical Unemployment Rate Is Positive When

question 18

Multiple Choice

The cyclical unemployment rate is positive when

• A) there is a recessionary gap.
• B) there is an expansionary gap.
• C) the output gap equals zero.
• D) frictional unemployment equals structural unemployment.
• E) the sum of frictional,structural,and seasonal unemployment equals zero.

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Definitions:

Fed Funds Rate

The rate at which banks and other financial institutions borrow and lend their Federal Reserve deposits to one another on an overnight basis.

LIBOR

The London Interbank Offered Rate (LIBOR) is a benchmark interest rate at which major global banks lend to one another.

Risk-Free Rates

The theoretical return on investment with no risk of financial loss, typically represented by the yield on government securities.

Arbitrage Opportunities

Situations where an asset is priced differently in two or more markets, allowing for the profit from the price differences.