Econ 101 Midterm 2
discouraged workers
individuals who have given up looking for a job (not considered unemployed)
actual rate of unemployment
natural + cyclical
per capita real GDP
real GDP/population
Ricardo-Barro Effect
the government budget has no effect on either the real interest rate or investment
diminishing returns
the property whereby the benefit from an extra unit of an input declines as the quantity of the input increases
human capital
the skills and knowledge gained by a worker through education and experience
Why is economic growth so slow or non-existent in many third world countries? what policies would you propose to improve the situation?
they lack economic freedom. Policies that reduce government corruption
Capital
tools, instruments, machines, buildings, and other items that have been produced in the past and that businesses now use to produce goods and services
marginally attached workers
would like to be employed and have looked for a job in the recent past but are not currently looking for work. (looked in the last 12 months but not the last 4 weeks)
cyclical unemployment
fluctuating unemployment over the business cycle that increases during a recession and decreases during an expansion
per capita growth rate equation
(per capita GDP 2 - per capita GDP 1 / per capita GDP 1) x 100
structural unemployment
1. Occurs when there are fewer jobs than workers 2. Arises from structural changes (technological, international competition) that change the required job skills or the locations of jobs 3. Usually longer-term (ex. ATM destroyed bank teller jobs)
frictional unemployment
1.Occurs when workers spend time searching for the jobs that best suit their taste and skills (scarcity of information matters) 2.Arise from normal labor turnover 3.Short-term for most workers (ex. a graduate interviewing for his first job)
Which of the following creates job rationing? A) The real wage rate is above the equilibrium level. B) An increase in unemployment benefits. C) Job search decreases. D) The real wage rate is below the equilibrium level. E) The real wage rate is equal to the equilibrium level.
A) The real wage rate is above the equilibrium level.
U-4, U-5 and U-6 are A) all broader measures of the unemployment rate. B) broader measures of the labor force participation rate. C) not used by the Bureau of Labor Statistics because they include too much variability. D) narrower measures of the labor force participation rate. E) all narrower measures of the unemployment rate.
A) all broader measures of the unemployment rate.
Rick lost his job as a logistics and distribution coordinator nearly three years ago. After a long and failed search, Rick finally gives up and stops looking for a new job. Rick's decision to suspend his job search causes the unemployment rate to ________ and the labor force participation rate to ________. A) decrease; decrease B) increase; decrease C) increase; stay the same D) stay the same; decrease E) increase; increase
A) decrease; decrease
Unemployment benefits in western Europe are more generous than in the United States. As a result, ________ in the United States. A) frictional unemployment is lower B) cyclical unemployment is higher C) structural unemployment is higher D) avoidable unemployment is lower E) frictional unemployment is higher
A) frictional unemployment is lower
As firms search for the best employee to fill an opening and the unemployed search for the job that best fits their skills, the economy experiences A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) avoidable unemployment. E) changes in the business cycle.
A) frictional unemployment.
Which of the following would be considered a marginally attached worker? i. Amy, who is working 20 hours per week at her father's business ii. Carl, who isn't working and has not looked for work in 3 months because he has been turned down for work when he last looked iii. Keke, who quit her job to take care of her daughter A) ii only B) i and ii C) i only D) ii and iii E) i, ii, and iii
A) ii only
An increase in unemployment benefits ________ and an increase in international competition that changes the location of jobs ________. A) increases frictional unemployment; increases structural unemployment B) decreases structural unemployment; decreases cyclical unemployment C) decreases cyclical unemployment; decreases cyclical unemployment D) decreases cyclical unemployment; increases cyclical unemployment E) increases structural unemployment; decreases frictional unemployment
A) increases frictional unemployment; increases structural unemployment
To be considered unemployed, a worker must have had A) no employment during the week before the survey and be actively looking for a job. B) part-time employment while actively looking for a full-time job. C) no employment during the day before the survey and be actively looking for a job. D) no employment during the week before the survey and be actively looking for a job while a student. E) Both answers A and B are correct.
A) no employment during the week before the survey and be actively looking for a job.
After 15 years with Ford Motor Corporation, one summer Cameron loses his job. His boss explained that his position has been downsized after the technological advances in automobile production. Cameron is best considered A) structurally unemployed. B) cyclically unemployed. C) avoidably unemployed. D) not in the labor force. E) frictionally unemployed.
A) structurally unemployed.
At full employment there still exists some unemployment because A) the U.S. economy is constantly creating and destroying jobs. B) there are always people too old or young to be in the labor force. C) it is unnatural to have all people work 40 hours per week. D) some portion of our population will always be too lazy to work. E) real GDP can never exceed potential GDP.
A) the U.S. economy is constantly creating and destroying jobs.
At the peak of a business cycle, the A) unemployment rate is below the natural unemployment rate. B) cyclical unemployment rate is positive. C) unemployment rate is above the natural unemployment rate. D) natural unemployment rate is negative. E) frictional unemployment rate is zero.
A) unemployment rate is below the natural unemployment rate.
During the year a country's income was $6.0 trillion and its consumption was $5.5 trillion. At the start of the year its wealth was $30.0 trillion. The country's wealth at the end of the year was A)$30.5 trillion. B)$30.0 trillion. C)$36.0 trillion. D)$6.0 trillion. E)$35.5 trillion.
A)$30.5 trillion.
The Zonamo company produces waste disposal machines and sells them to militaries all over the world. The company started last year with $10 million of capital on hand and invested $15 million in new capital throughout the year. At the end of the year, the company's capital stock was $17million. Hence, for the year, depreciation equaled ________ and net investment equaled ________. A)$8 million; $7 million B)$5 million; $5 million C)$8 million; $15 million D)$25 million; $5 million E)$7 million; $8 million
A)$8 million; $7 million
Belgium's real GDP per person is $33,000 and Austria's is $34,700. The population growth rate in Belgium is 0.13 percent and the growth rate of real GDP is 3.0 percent. The population growth rate in Austria is 0.08 percent and the growth rate of real GDP is 3.3 percent. If these growth rates continue, how many years will it take for Belgium's real GDP per person to equal Austria's real GDP per person? A)Belgium's standard of living will never equal Austria's. B)just over 23 years C)just over 24 years D)over 230 years E)just over 21 years
A)Belgium's standard of living will never equal Austria's.
Economic growth is defined as A)a sustained expansion of production possibilities. B)an increase in employment. C)a decrease in the rate of inflation. D)an increase in the nation's population. E)an increase in the wage rate.
A)a sustained expansion of production possibilities.
If a government has a budget deficit, it must A)borrow in the loanable funds market. B)increase taxes. C)decrease its expenditures. D)decrease taxes. E)lower the real interest rate.
A)borrow in the loanable funds market.
In the loanable funds market, demanders of funds are ________ and suppliers of funds are________. A)firms and the government if it has a budget deficit; households and the government if it has a budget surplus B)households and the government if it has a budget deficit; firms and the government if it has a budget surplus C)firms and the government if it has a budget surplus; households and the government if it has a budget deficit D)households and the government if it has a budget surplus; firms and the government if it has a budget deficit E)households and firms; the government if it has a budget deficit
A)firms and the government if it has a budget deficit; households and the government if it has a budget surplus
Suppose the real interest rate increases from 4 percent to 6 percent. As a result A)firms decrease the quantity demanded of loanable funds. B)governments increase the supply of loanable funds. C)firms increase their demand for loanable funds. D)governments decrease the quantity supplied of loanable funds. E)governments decrease their demand for loanable funds.
A)firms decrease the quantity demanded of loanable funds.
The expansion of human capital and the discovery of new technologies ________ because________. A)increase real GDP; they shift the productivity curve upward B)increase real GDP; they shift the productivity curve downward C)decrease real GDP; they shift the productivity curve downward D)decrease real GDP; they shift the productivity curve upward E)increase real GDP; they result in a movement upward along the productivity curve
A)increase real GDP; they shift the productivity curve upward
The Ricardo-Barro effect is based on the idea that ________ when the government has a budget deficit. A)people increase their private saving B)people decrease their private saving C)investment demand increases because expected future profits increase D)investment demand decreases because of the higher real interest rate E)people immediately increase their tax payments
A)people increase their private saving
If the real interest rate rises, then the A)quantity of saving increases and there is a movement up along the supply of loanable funds curve. B)demand for investment decreases and the demand for loanable funds curve shifts leftward. C)supply of saving decreases and the supply of loanable funds curve shifts leftward. D)supply of saving increases and the supply of loanable funds curve shifts rightward. E)quantity of saving decreases and there is a movement down along the supply of loanable funds curve.
A)quantity of saving increases and there is a movement up along the supply of loanable funds curve.
If saving supply decreases, the equilibrium real interest rate ________ and the equilibrium quantity of investment ________. A)rises; decreases B)does not change; does not change C)rises; increases D)falls; increases E)falls; decreases
A)rises; decreases
If investment demand increases, the equilibrium real interest rate ________ and the equilibrium quantity of investment ________. A)rises; increases B)rises; decreases C)falls; decreases D)falls; increases E)does not change; does not change
A)rises; increases
When the unemployment rate is ________ the natural unemployment rate, real GDP is ________. A) below; increasing B) below; above potential GDP C) equal to; either equal to potential GDP or above potential GDP D) above; increasing E) above; above potential GDP
B) below; above potential GDP
Jane is a 25 year old, full-time student. She works part time in her school library and is paid $10 an hour. She is considered to be A) in labor force but not working. B) employed. C) unemployed. D) not in the working-age population because she is in college. E) not in labor force.
B) employed
Which of the following is TRUE? One way to be classified as employed is by i. working 1 hour per week at a paid job. ii. working 15 or more hours as an unpaid worker in family business. iii. making specific efforts to find a job within the last four weeks. A) ii only. B) i and ii only. C) If you are not working and turn down a job offer in the previous week, you are no longer classified i, ii, and iii. D) i only. E) iii only.
B) i and ii only.
When the unemployment rate is greater than the natural unemployment rate, real GDP is A) unrelated to potential GDP. B) less than potential GDP. C) greater than full employment GDP. D) equal to potential GDP. E) greater than potential GDP.
B) less than potential GDP.
Over the last 60 years, U.S. labor productivity grew the fastest during the ________ because of________. A)1990s; advancements in healthcare due to the unlocking of the human genome B)1960s; fast paced technological change and large increases in human capital accumulation C)1980s; the invention of the computer and the oil embargo D)1970s; an increase in government taxes and expanded regulations E)2000s; the war on terror and return to the basics of education
B)1960s; fast paced technological change and large increases in human capital accumulation
The widespread adoption of computers in the workplace has likely led to A)a decrease in labor productivity because computers are a capital good. B)an increase in labor productivity because computers are a capital good. C)a decrease in human capital because computers are physical capital. D)no change in the quantity of labor hours. E)an increase in the supply of labor because people are needed to operate the computers.
B)an increase in labor productivity because computers are a capital good.
According to the law of diminishing returns, an additional unit of A)labor decreases output. B)capital produces less output than the previous unit. C)capital produces the same amount of output as an additional unit of labor. D)capital produces more output than the previous unit. E)capital produces more output than an additional unit of labor.
B)capital produces less output than the previous unit.
Expansion of a nation's human capital can be achieved through A)education only. B)education and training. C)education and technology improvements. D)education and saving. E)nothing because human capital is determined by the skills people are born with.
B)education and training.
The distinction between physical and financial capital is that A)physical capital is equal to financial capital minus depreciation. B)financial capital is used to purchase and operate physical capital. C)the value of financial capital depends on the amount of available physical capital. D)physical capital is equal to financial capital plus depreciation. E)financial capital depreciates and physical capital does not.
B)financial capital is used to purchase and operate physical capital.
Evidence to support the Ricardo-Barro effect would show that A)higher government budget deficits decrease investment. B)government budget deficits have no effect on the real interest rate or investment. C)government budget deficits increase household consumption. D)higher government budget surpluses decrease investment. E)higher government budget deficits raise the real interest rate.
B)government budget deficits have no effect on the real interest rate or investment.
Last year, in a nation far to the South, real GDP was $90 million and 900,000 workers were employed. This year real GDP is $100 million, 950,000 workers are employed, and the number of hours each worker works per year did not change. Hence, labor productivity A)has remained constant. B)has increased. C)has decreased. D)cannot be compared between the two years because both real GDP and the number of workers increased. E)might have changed, but more information is needed to determine if it changed.
B)has increased.
The crowding-out effect is the tendency for A)lower private saving to increase the budget deficit. B)higher government budget deficits to decrease investment. C)lower private saving to decrease investment. D)higher private savings to decrease government budget surpluses. E)higher government budget deficits to increase total savings.
B)higher government budget deficits to decrease investment.
In 2020, the U.S. federal government budget had a budget deficit. If there is no Ricardo-Barro effect, this deficit ________ the demand for loanable funds and ________ the real interest rate. A)did not change; did not change B)increased; raised C)decreased; lowered D)increased; lowered E)decreased; raised
B)increased; raised
Economic growth in Cuba has been slow. What can best explain the slow growth? A)labor productivity is low B)lack of incentive mechanisms and economic freedom C)too much competition within the economy D)a non-democratic form of government E)lack of economic resources
B)lack of incentive mechanisms and economic freedom
Government saving is equal to A)the quantity of investment demanded. B)net taxes minus government expenditures. C)private savings minus government expenditures. D)net taxes. E)net taxes plus government expenditures
B)net taxes minus government expenditures.
Economic growth is a sustained expansion of production possibilities, as measured by the increase in ________ over time. A)employment B)real GDP C)the price level D)inflation E)population
B)real GDP
The opportunity cost of the financial resources used to finance the purchase of capital is A)the quantity of investment demanded. B)the real interest rate. C)capital investment. D)the price of the capital goods purchased. E)the supply of investment.
B)the real interest rate.
The natural unemployment rate occurs A) when the sum of frictional and structural unemployment equals zero. B) when the frictional unemployment rate equals zero. C) at the full employment level of unemployment. D) when the structural unemployment rate equals zero. E) when the unemployment rate equals zero.
C) at the full employment level of unemployment.
During the Great Depression of the 1930s when the unemployment rate was exceptionally high due to the Great Depression, the government had employment programs, such as the Civilian Conservation Corps, which built campsites and planted trees. These programs were aimed at reducing which type of unemployment? A) avoidable B) discouraged C) cyclical D) frictional E) structural
C) cyclical
When the automobile replaced horse-drawn carriages as the principal means of transportation, firms producing horse-drawn carriages went bankrupt and permanently laid off all their workers, thereby increasing i. seasonal unemployment. ii. structural unemployment. iii. cyclical unemployment. A) i and ii B) i only C) ii only D) ii and iii E) i and iii
C) ii only
Frictional unemployment is the result of A) a slowdown in the rate of economic expansion. B) technological change or foreign competition. C) normal labor market turnover. D) changes in the weather. E) the economy entering a strong expansion.
C) normal labor market turnover.
France is considering implementing policies that will reduce the duration of job search. A possible option is for France to A) require all residents between the ages of 19 and 26 to obtain a part-time or full-time job. B) help negotiate higher union benefits for employed workers. C) reduce unemployment benefits. D) increase the minimum wage. E) Both answers A and B are correct.
C) reduce unemployment benefits.
Assume the population growth rate is 2 percent and the real GDP growth rate is 5 percent. The change in the standard of living, as measured by the growth rate in real GDP per person, is A)2.5 percent. B)5 percent. C)3 percent. D)7 percent. E)-3 percent.
C)3 percent.
Suppose that an Intel worker rearranges existing machines and labor and increases the quantity of chips Intel can produce. Using the productivity curve graphed, this innovation would be described as A)a movement downward along the curve. B)a movement upward along the curve. C)a shift of the curve upward. D)a shift of the curve downward. E)no change to the productivity curve.
C)a shift of the curve upward.
Increasing savings and ________ consumption expenditure go hand in hand because they both________. A)decreasing; are the result of an increase in nominal interest rates on the loanable funds market B)increasing; are the result of an increase in nominal interest rates on the loanable funds market C)decreasing; are the result of an increase in real interest rates on the loanable funds market D)increasing; are the result of an increase in real interest rates on the loanable funds market E)None of the above answers is correct.
C)decreasing; are the result of an increase in real interest rates on the loanable funds market
Which of the following are typically financed in the loan market? i. a mortgage for a house ii. credit card balances iii. the purchase of a share of stock in a corporation. A)i, ii and iii B)i and iii C)i and ii D)ii and iii E)i only
C)i and ii
If half of all unemployed individuals suddenly gave up looking for work, the unemployment rate would ________ and the labor force participation rate would ________. A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease E) There is not enough information to answer this question.
D) decrease; decrease
Potential GDP is the level of output produced when the unemployment rate is A) less than the natural unemployment rate. B) greater than the natural unemployment rate. C) made up of only cyclical unemployment. D) equal to the natural unemployment rate. E) zero.
D) equal to the natural unemployment rate.
Which of the following can result in job rationing? i. minimum wage ii. union wage iii. diminishing returns A) i only B) ii only C) iii only D) i and ii E) i, ii, and iii
D) i and ii
Which of the following help explain the increase in the U.S. labor force participation rate for women? i. There was a significant fall in the number of children women were choosing to have. ii. There was an increase in the educational level of women. iii. Technological change in the home increased the time available for work outside the home. A) i only B) ii only C) i and ii D) ii and iii E) i, ii, and iii
D) ii and iii
Full employment occurs when A) the sum of frictional and structural unemployment is zero. B) the unemployment rate is zero. C) the frictional unemployment rate is zero. D) the cyclical unemployment rate is zero. E) the structural unemployment rate is zero.
D) the cyclical unemployment rate is zero.
The total U.S. labor force participation rate increased over the past 50 years because A) more men are retiring early. B) fewer women are attending college. C) many blue-collar jobs with rigid work hours have been created in the last decade. D) the female labor force participation rate increased. E) the male labor force participation rate increased.
D) the female labor force participation rate increased.
In the figure above, the DLF curve is the demand for loanable funds curve and the PDLF curve is the private demand for loanable funds curve. If there is no Ricardo-Barro effect, the figure shows a situation in which the government has a budget A)surplus of $0.5 trillion. B)deficit of $0.5 trillion. C)deficit of $1.5 trillion. D)deficit of $1 trillion. E)surplus of $1 trillion.
D)deficit of $1 trillion.
The growth rate of real GDP per person equals the A)change in the economic growth rate divided by the change in the population growth rate. B)population growth rate plus the growth rate of real GDP then divided by the initial level of real GDP. C)population growth rate plus the growth rate of real GDP. D)growth rate of real GDP minus the growth rate of the population. E)the economic growth rate per person divided by the change in the population growth rate.
D)growth rate of real GDP minus the growth rate of the population.
In the late 1990s, the U.S. federal government had a budget surplus. If there is no Ricardo-Barro effect, these surpluses ________ the supply of loanable funds and ________ the real interest rate. A)decreased; raised B)did not change; did not change C)increased; raised D)increased; lowered E)decreased; lowered
D)increased; lowered
The shape of the productivity curve reflects the A)effects of population growth. B)effects of capital accumulation. C)change in labor productivity as human capital increases. D)law of diminishing marginal returns. E)effects of technological progress.
D)law of diminishing marginal returns.
Real GDP in the country of Oz is growing at 5 percent and its population is growing at 2 percent. In the country of Lilliput, real GDP is growing at 4 percent and its population is growing at 0.5percent. Thus A)real GDP per person in Oz is growing at a faster rate than in Lilliput. B)real GDP per person in Lilliput is growing at the same rate as in Oz. C)real GDP per person in Lilliput is growing at a rate that is not comparable to that in Oz. D)real GDP per person in Lilliput is growing at a faster rate than in Oz. E)We need more information to determine if real GDP per person in Lilliput is growing faster or slower than real GDP per person in Oz.
D)real GDP per person in Lilliput is growing at a faster rate than in Oz.
A technological change ________ and a change in the capital stock ________. A)does not change the productivity curve; creates a movement along the productivity curve B)shifts the productivity curve; shifts the productivity curve C)does not change the productivity curve; shifts the productivity curve D)shifts the productivity curve; creates a movement along the productivity curve E)creates a movement along the productivity curve; shifts the productivity curve
D)shifts the productivity curve; creates a movement along the productivity curve
An increase in capital brings a large increase in output at a ________ quantity of capital and as mall increase in output at a ________ quantity of capital because of ________. A)large; small; diminishing returns along the productivity curve B)large; small; increasing returns along the productivity curve C)large; small; the greater the quantity of capital the greater the output D)small; large; diminishing returns along the productivity curve E)small; large; increasing returns along the productivity curve
D)small; large; diminishing returns along the productivity curve
The highest unemployment rate in U.S. history was about A) 10.2 percent in 2009. B) 5.9 percent in 1972. C) 52 percent in 1939. D) 10 percent in 1982. E) 25 percent in 1933.
E) 25 percent in 1933.
Suppose the population of Timmy Town is 1,000 people and the working-age population is 800. If 200 of these people are unemployed, the unemployment rate in Timmy Town is A) 1/8 × 100. B) 2 percent. C) 1/5 × 100. D) 1/4 × 100. E) There is not enough information provided to calculate the unemployment rate.
E) There is not enough information provided to calculate the unemployment rate.
Structural unemployment usually lasts ________ period of time ________ unemployment A) the same; as cyclical B) a shorter; than seasonal C) a shorter; than frictional D) a shorter; than cyclical E) a longer; than frictional
E) a longer; than frictional
Producing an amount of GDP equal to potential GDP is most consistent with the economy producing A) either on or beyond the production possibilities frontier. B) within the production possibilities frontier. C) beyond the production possibilities frontier. D) on the production possibilities frontier. E) either on or within the production possibilities frontier.
E) either on or within the production possibilities frontier.
Which of the following increases frictional and/or structural unemployment? i. more young workers entering the labor force ii. more generous unemployment benefits iii. a structural slump with some industries dying A) i only B) ii only C) iii only D) i and ii E) i, ii, and iii
E) i, ii, and iii
After graduating from college, Yunis, age 22, started working for his parents' real estate business as an unpaid assistant. He works 25 hours a week helping manage rental units. In the Current Population Survey, Yunis is considered A) part of the labor force and unemployed. B) part of the labor force but not part of the working-age population. C) a discouraged worker. D) not part of the labor force. E) part of the labor force and employed.
E) part of the labor force and employed.
The unemployment rate at full employment is A) equal the amount of unemployment caused by job search. B) equal to the rationed rate of unemployment. C) undefined because the economy is never at full employment. D) zero. E) the natural unemployment rate.
E) the natural unemployment rate.
In 2020, real GDP in the United States was below potential GDP. This fact definitely means that A) the economy was in an expansion. B) cyclical unemployment had been decreasing. C) the unemployment rate was near 10 percent. D) frictional unemployment was negative. E) the unemployment rate was above the natural unemployment rate.
E) the unemployment rate was above the natural unemployment rate.
________ increases the quantity of capital, and ________ decreases the quantity of capital. A)Investment; saving B)Gross investment; net investment C)Net investment; gross investment D)Depreciation; net investment E)Investment; depreciation
E)Investment; depreciation
Labor productivity growth depends on i. saving and investment. ii. increases in human capital. iii. technological growth. A)i only B)ii only C)iii only D)ii and iii E)i, ii, and iii
E)i, ii, and iii
To acquire financial capital, a firm can i. obtain a loan from a bank. ii. issue stock. iii. issue bonds. A)i only B)ii only C)iii only D)i and iii E)i, ii, and iii
E)i, ii, and iii
An increase in the real interest rate A)has no effect on the loanable funds. B)increases current consumption. C)decreases the quantity of loanable funds supplied. D)shifts the supply of loanable funds curve rightward. E)increases the quantity of loanable funds supplied.
E)increases the quantity of loanable funds supplied.
When the real interest rate ________ the equilibrium real interest rate, there is a ________ of loanable funds and the real interest rate ________. A)is less than; shortage; falls B)exceeds; surplus; rises C)is less than; surplus; rises D)exceeds; shortage; rises E)is less than; shortage; rises
E)is less than; shortage; rises
To measure the change in the standard of living, it is best to use the growth rate A)from the Rule of 70. B)of real GDP. C)of the price level. D)of the population. E)of real GDP per person.
E)of real GDP per person.
The presence of government corruption in some countries A)supports the classical growth theory's predictions. B)speeds their economic growth. C)invalidates the new growth theory's predictions. D)invalidates the neoclassical growth theory's predictions. E)slows their economic growth.
E)slows their economic growth.
One type of demander in the loanable funds market A)lends funds to purchase financial capital. B)wants physical capital in order to purchase financial capital. C)wants funds to purchase financial capital. D)lends funds to purchase physical capital. E)wants funds to purchase physical capital.
E)wants funds to purchase physical capital.
working age population
The total number of people aged 16 years and over who are not in jail, hospital, or some other form of institutional care or in the U.S. Armed Forces.
efficiency wages
above-equilibrium wages paid by firms to increase worker productivity
economic growth
an increase in the amount of goods and services produced by an economy over time
What policies can a government undertake to achieve faster economic growth?
economic freedom must exist, property rights enforced, and markets are free
labor force
employed + unemployed
natural rate of unemployment
frictional unemployment + structural unemployment
Rule of 70 formula
number of years to double = 70/growth rate
full employment
occurs when the actual unemployment rate equals the natural unemployment rate. At full employment, all the unemployment is frictional or structural - and not cyclical unemployment