If the Actual Unemployment Rate Is 7% and the Cyclical

question 94

Multiple Choice

If the actual unemployment rate is 7% and the cyclical unemployment rate is 2%, then the natural rate of unemployment is:

• A) 2%.
• B) 5%.
• C) 7%.
• D) 9%.

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Definitions:

Economic Efficiency

A situation in which resources are optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.

Market

A system or an environment where buyers and sellers interact to trade goods, services, or financial instruments.

Free-rider Problem

A situation where individuals consume goods or services without paying for them, which typically occurs with non-excludable and non-rival public goods.

Market Resources

The assets, materials, and inputs used to produce goods and services and are made available through the market.