In an economic expansion, people used their charge cards to purchase many goods. Now the economy is in a recession and people must use much of their reduced incomes to pay back debts. If employees manufacturing the goods people used to buy are laid off, they will suffer from:
a. cyclical unemployment.
b. structural unemployment.
c. permanent unemployment.
d. frictional unemployment.
e. underemployment.
Question 2
If your income increases from 30,000 to 40,000 and your savings increases from 2,000 to 4,000 . your marginal propensity to save (MPS) is:
a. 0.2.
b. 0.4.
c. 0.5.
d. 0.8.
e. 1.0.
