When the actual unemployment rate is unusually high, Answer the natural rate of

ID: 1177978 • Letter: W

Question

When the actual unemployment rate is unusually high,

Answer

the natural rate of unemployment must be rising as well.

the economy can not be in equilibrium.

the level of inflation is also likely to be unusually higher than before.

the level of aggregate spending is relatively low.

cyclical unemployment is declining.

the federal budget is likely to be having growing surpluses.

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One major point that Keynes raised pertains to income and spending. He argued that:

Answer

All income is often spent in the same period of time

Oftentimes, people spend more than their incomes

The marginal propensity to spend out of additional income is quite volatile

Pessimism could cause aggregate spending to fall short of total output

Ans-1) the level of inflation is also likely to be unusually higher than before.

Ans-2)All income is often spent in the same period of time

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