For Markets to Be in Equilibrium, That Is, for There

question 65

Multiple Choice

For markets to be in equilibrium, that is, for there to be no strong pressure for prices to depart from their current levels,

• A) The past realized rate of return must be equal to the expected future rate of return; that is,
• B) The required rate of return must equal the past realized rate of return; that is, .
• C) The expected rate of return must be equal to the required rate of return: that is. .
• D) All of the above statements must hold for equilibrium to exist; that is
• E) None of the above statements is correct.

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Definitions:

Natural Level of Employment

The rate of employment where the labor market is in equilibrium, with no cyclical unemployment.

Prolonged Unemployment

Prolonged unemployment refers to an extended period during which an individual remains jobless despite actively seeking employment, often leading to significant economic and psychological consequences.

Labor Skills

The abilities and expertise that workers possess, which determine their employability and efficiency in performing specific tasks.

Inflation Rate

The rise in the cost of goods and services across an economy over a specific period, expressed as a percentage.