1. At the economy's natural rate of unemployment
a .the economy is fully employed.
b. there is only a relatively small amount of cyclical unemployment.
c. only frictional unemployment exists.
2. Suppose Canada has a population of 30 million people and a labor force participation rate of 2/3. Furthermore, suppose the natural rate of unemployment in Canada is 7%. If the current number of unemployed people is 2 million people, what can we conclude about Canada’s economy?
a. The unemployment rate is above the natural rate of unemployment.
b. The unemployment rate is below the natural rate of unemployment.
c. There is no frictional unemployment present in the economy.
3. Use the following table to answer the next question. The base year is 2007.
Year
Hot Dogs
Price Quantity
Baseballs
Bottles of Beer
2005
$ 2.50 100
$ 2.50 50
$1.00 100
2006
4.00 100
5.00 100
2.00 150
2007
2.00 200
2008
8.00 150
8.00 200
4.00 200
2009
10.00 200
4.00 250
The Consumer Price Index for the year 2005 is
a. 150.
b. 100.
c. 50.
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