When the rate of cyclical unemployment is zero, the: a. natural ...

[clmills979]

When the rate of cyclical unemployment is zero, the:
 a. natural rate of unemployment must also be zero.
  b. rate of frictional unemployment must be negative.
  c. economy must have entered a recessionary stage.
  d. Keynesian aggregate supply curve must be horizontal.
  e. economy is considered to be at full employment.

Question 2

Suppose that the economy is operating in full-employment equilibrium along the vertical section of the aggregate supply curve. If the aggregate demand curve is reduced by 100 billion in order for the price level to decline by 5 percent, and if the marginal propensity to consume (MPC) is 0.75, then what change in taxes would generate the desired price reduction?
 a. 300 billion.
  b. -75 billion.
  c. -33.3 billion.
  d. -25 billion.

[jamesnevil303]

Answer to Question 1

e

Answer to Question 2

c

[clmills979]

Thanks for the timely response, appreciate it

[hollysheppard095]

YES! Correct, THANKS for helping me on my review