Two economists are debating the cause of a high unemployment rate. One economist argues that there is
Question:
Two economists are debating the cause of a high unemployment rate. One economist argues that there is not enough government spending. The other says high unemployment is a structural problem—people who can't move to take new jobs because they are tied down to burdensome mortgages or firms that can't find workers with the skills they need to fill job openings.
Which business cycle theory would say that the first economist is correct and why?
______ business cycle theory, because it says unemployment is caused by too little aggregate ______ .
A. Mainstream; supply
B. Real; demand
C. Mainstream; demand
D. Real; supply
Which business cycle theory would say that the second economist is correct and why?
______ business cycle theory, because it says unemployment is ______ .
A. Mainstream; caused by technological shocks that decrease aggregate supply.
B. Real; structural, caused by too little aggregate demand.
C. Mainstream; caused by too little aggregate demand.
D. Real; structural, caused by technological shocks that decrease aggregate supply.
Expert Answer:
1 Mainstream demand Unemployment is a situation when people who is able and willin... View the full answer
