Zoltan Novak, and Paul smith both residents of the country of EAST Paragon are d
ID: 1219827 • Letter: Z
Question
Zoltan Novak, and Paul smith both residents of the country of EAST Paragon are discussing whether the economy is operating at full employment. Zoltan, a market analyst argues that with unemployment at 5.3%, the economy cannot possibly be fully utilizing all its resources. Paul, who is a journalist, disagree based on a recent newspaper article that shows industrial production in East Paragon is at its highest level. This, he claims, is likely to indicate that the economy is operating at full employment. Which of the following statements is paul and Zoltan likely to agree with? A. The economy of East Paragon is operating on the production possiblilites frontier. B. Frictional unemployment is zero. C. Structural unemployment in the economy is positive. D. The current level of unemployment is the highest that East Paragon has ever witnessed E. GDP is going to decline in the near future.
Explanation / Answer
Option (C).
Unemployment, whether at full employment level or not, always includes a positive amount of Structual unemployment. So, even if they disagree with all other statements, this will be an agreement for them.
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