Question

True or false with small explanation please

A. Natural rate of unemployment corresponds to 0% cyclical unemployment rate.

B. Catch-Up Effect refers to how the US grew rapidly due to the Internet revolution in the 1990’s.

c. Okun's Law has always worked for all business cycles in USA.

D. Adam Smith believed that nations would grow poor over a period of time.

E. Official unemployment rate drops when part time workers start working full time.

Answer 1

A.TRUE.The natural rate of unemployment refers to a combination of frictional, structural, and surplus unemployment and it exists when there are only frictional and structural unemployment.. The natural unemployment rate occurs when the economy is in neither a boom nor a recession period. Hence we can say that natural rate of unemployment corresponds to 0% cyclical unemployment rate.

B. TRUE. Catch up effect states the poorer economies per capita incomes will tend to grow at faster rates than the richer economies. The internet revolution in US had emerged during 1990's and the US economy grew rapidly due to the Internet revolution.

C. TRUE. Okun's law describes the relationship between the unemployment rate and its GNP (Gross National Product) of USA's economy. The Okun’s law evaluates the degree of time variation in the unemployment and output fluctuations over the business cycle. Though Okun's law has some breakdowns, it worked for all business cycles in USA.

D. TRUE. Adam Smith believed that nations would grow poor over a period of time when the mercantile system of a nation practices a wrong direction.