An economy experiencing healthy macroeconomic conditions

a.Is performing below potential; has zero percent overall unemployment rate; and has zero percent cyclical unemployment.

b.Is performing below potential; has unemployment rate equal to the natural rate; and has zero percent frictional unemployment.

c.Is performing at potential; had unemployment rate equal to the natural rate; and has zero percent cyclical unemployment.

d.Is performing at potential; has zero percent overall unemployment rate; and has zero percent cyclical unemployment.

Suppose your uncle started college in 1998 and had a job busing dishes that paid $5 per hour. In 2008 you had the same job; it paid $6 per hour. The CPI in 1998 was 163.0; in 2008 it was 216.5. Which job paid more?

your uncle was paid more in real terms.

you were paid more in real terms.

there is no way of telling who was paid more.

you and your uncle were paid the same in real terms.

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