The population of Tunisia is 100 million; 5 million are unemployed and 90 million hold jobs. The employment rate in Tunisia is
Answer(s): A
The employment rate is equal to the number employed/total population or 90 million/100 million = 90%.
When individuals are unemployed because they lack the qualifications to fill available jobs, we call this a form of
Answer(s): C
Structural unemployment implies that changes in the basic characteristics of the economy prevent the "matching up" of available jobs with available workers. Thus, workers possess skills which are not demanded by employers and employers demand skills that unemployed workers do not have.
An expansionary fiscal policy causes which of the following effects?
Answer(s): B
When the government adopts an expansionary fiscal policy, the aggregate demand increases, causing an increase in prices. Since the demand for loanable funds increases due to the governmental presence in the market, the real interest rate increases. This attracts foreign investment, raising the demand for domestic currency, which appreciates in response. The appreciation of the domestic currency makes imports cheaper and exports costlier. As a result, exports decline and imports increase over time.
Holding income constant, if consumers and investors decide to spend more on goods and services, then
Strong aggregate demand will put pressure on the market for loanable funds and will result in higher interest rates (as the demand for funds increases). This will cause aggregate demand to contract from its heightened state. This adjustment represents one of the economy's self-correcting mechanisms.
The Keynesian model indicates that when individuals plan to save more (and spend less), the result may be a (n)
An increase in savings implies a decrease in disposable income and thus a decline in consumption. As a result aggregate demand will fall and output will follow. Output is equivalent to income and thus the equilibrium level of income also declines.
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