The estimate of the natural rate of unemployment in the united states is around

Question

The estimate of the natural rate of unemployment in the united states is around Select one: 3% 8-8.5% 5%-5.5% 13% Which of the following is true regarding the Federal Reserve Select one It's board members are elected by the people living in the bank's They are a branch of the Federal Government under the U.S. treasury The members of the Board of Governor are appointed by the president of the united states It is changed with collecting taxes The primary tool(s) of fiscal policy are: Select one: money supply and money demand nationalization interest rates government expenditures and taxation.

Explanation / Answer

Question 36: Unemployment means some eligible person capable and willing to do work are not engaged in a job. In old age it was beleived that when an economy is operating at its optimum capacity, no unemployment will exist. But modern economist believes it impossible. Some unemployment will be always there in the economy. Person have to take a time to select appropriate job. During this selection period he will remain unemployed. It is inevitable. In USA 5-5.5% is considered as as natural rate of unemployment.

Answer: Option (c) is correct.

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Question 37: Federal reserve is the central bank of USA. It is created to operate monetary system on behalf of Government of USA. It is apex of the banking anf financial system of the economy. So most appropriately it can be described as a branch of federal government under the US treasury.

Answer: Option (b) is correct.

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Question 38: Fiscal policy and monetary policy are two basic weapons available to government for controlling economy. Usually they are used to influence national income (Y) and interest rate (i) in a desired manner to create an impact in a desired manner. It is used to maintain demand supply stability in commodity and money market.

In fiscal poilcy government considered its budget. It is a projection of governments revenues and expenditures. Main source of government revenue is tax. By increasing or decreasing tax or by changing government spendings in social welfare activities, fiscal policy impact is created. Thus

Primary tools in fiscal policy are government expenditure and taxation. So option (d) is correct

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Question 39: Recession is a depressing phase in the economy. It occurs when investment is less profitable and risky. So new firms are coming to invest. Also many existing investors are reducing investment for fear of loss. The situation gets worsen if there is defecit in the fiscal budget. Expenditure is more than income. For collecting this fund government has made huge debt from public. As result public are scarce. There confidence level has shattered. It will make the depressionary situation more worse.

Thus option (a) is correct.

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