A Survey Reveals That, on a Small Island, Initially 40

question 129

Multiple Choice

A survey reveals that, on a small island, initially 40 people have jobs, 10 people are not working but are looking for jobs, and 30 people are neither working nor looking for work. Suppose that 10 of the 30 people who weren't working or looking for work now begin looking for work. There are now 20 people without jobs but looking for work and 40 people working. The unemployment rate:

• A) rises to 33.3%.
• B) rises to 50%.
• C) falls to 25%.
• D) Nothing happens to the unemployment rate because these people weren't working before and they aren't working now.

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Definitions:

Cost of Equity

Cost of equity is the return a firm theoretically pays to its equity investors, i.e., shareholders, to compensate them for the risk they undertake by investing their capital.

Debt-Equity Ratio

quantifies the proportion of a company's financing that comes from creditors and investors, showing the balance between debt (borrowed funds) and equity (shareholders' equity).

Targeted Cost

A cost management technique where a product's desired cost is set based on market conditions and desired profit, guiding design and production decisions.

Tax Rate

The quota of taxable income that the government demands from individual earners or corporate entities.