Author Question: Unemployment resulting from normal turnover in the labor market is called: a. frictional ... (Read 291 times)

mpobi80 · **on:** Jun 30, 2018

Unemployment resulting from normal turnover in the labor market is called:
a. frictional unemployment.
b. cyclical unemployment.
c. structural unemployment.
d. seasonal unemployment.

Question 2

What will happen to a country that fixes the price of foreign exchange below equilibrium?

juiceman1987 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

a

Answer to Question 2

If foreign exchange is priced below equilibrium, then the domestic currency is overvalued. When the price of foreign exchange is fixed below equilibrium, the quantity of foreign exchange demanded by domestic citizens will exceed that supplied by foreigners. A shortage of foreign exchange will result, and a black market will develop where domestic citizens attempt to buy foreign currency with which to conduct foreign exchange. The fixing of exchange rates will limit the citizens' ability to gain from trade.