The gap between the current unemployment rate and the natural rate of unemployment is called
A) frictional unemployment.
B) structural unemployment.
C) cyclical unemployment.
D) full employment.
Which of the following is NOT a reason given by economists for the failure of Okun's law to account for the rise in unemployment during the recession of 2007-2009?
A) increased willingness among firms to lay off workers during recessions
B) a surge in productivity during the recession
C) the unusual severity of the recession
D) It does not take into account the effect of the stimulus.
All of the following tend to occur when unemployment is above the natural rate EXCEPT
A) wage increases will be limited.
B) inflation will rise.
C) increases in the cost of production will be limited.
D) there is slack in the labor market.
According to the Phillips Curve,which of the following may have taken place if both the unemployment rate and inflation have risen?
A) a negative supply shock
B) an increase in expected inflation
C) a severe recession
D) a negative demand shock