In a small Asian country, it is estimated that changing the level ...

[cnetterville]

In a small Asian country, it is estimated that changing the level of capital from 8 million to 12 million will increase real GDP from 4 million to 6 million.
 
  What level of GDP would you expect the economy to be able to reach if spending on capital continued to rise to 16 million, assuming no technological change and no change in the hours of work?
  A) GDP would increase further by exactly 8 million.
  B) GDP would increase further by exactly 2 million.
  C) GDP would increase further, but by less than 2 million.
  D) GDP would increase further by more than 2 million

Question 2

What is the natural rate of unemployment, and what types of unemployment constitute the natural rate of unemployment?
 
  What will be an ideal response?

[lauravaras]

Answer to Question 1

C

Answer to Question 2

The natural rate of unemployment is the rate of unemployment that exists in the economy when cyclical unemployment is zero. This underlying level of unemployment in the economy consists of frictional and structural unemployment. The natural rate of unemployment is also known as the full-employment rate of unemployment.

[cnetterville]

Thank you

[lauravaras]

Happy to help you