When Output Increases by 1%, the Unemployment Rate Does Not

question 76

Multiple Choice

When output increases by 1%, the unemployment rate does not tend to fall by 1% in the short run because

• A) a firm is likely to meet some of the increase in output by increasing the number of hours worked per job.
• B) the number of people who become employed is less than the number of new jobs created.
• C) as output increases, the size of the labor force increases.
• D) all of the above

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Definitions:

Credit Commitment

An agreement by a lender to extend a specified amount of credit to a borrower under certain terms and conditions.

Promissory Note

A financial instrument in which one party promises in writing to pay a determinate sum of money to the other, either at a fixed or determinable future time or on demand.

Conditional Sales Contract

A sale agreement stating that the sale is conditional upon certain terms, often including the circumstances under which ownership is transferred.

Invoice

A document issued by a seller to a buyer, detailing a transaction and requesting payment for goods supplied or services rendered.