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Macroeconomics

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Moderate

Growth and Labor

MACRO-9L1TDD

Assume that the natural rate of unemployment or the full-employment rate of unemployment is 5 percent. Which of the following can be considered as economic growth and cause the long-run aggregate supply curve to increase?

A

Government spending increases, as does aggregate demand; the rate of unemployment fall from 7 percent to 5 percent.

B

A reduction in the wage rate, increases employment and the economy reaches full employment.

C

For a given labor supply, a better matching of the frictionally unemployed with job vacancies reduces the natural rate of unemployment from 5 percent to 4.5 percent.

D

A combination of fiscal polices eliminates cyclical unemployment.