Unemployment Inflation and Macroeconomic Stabilization Practice Questions | A-Level Economics

Unemployment Inflation and Macroeconomic Stabilization

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An economy reports an unemployment rate of 4.0% and a vacancy rate of 5.5%. Survey evidence shows average job-search duration has increased because workers are switching jobs more frequently. Which interpretation is most consistent with these facts?

Select one option.

The economy is experiencing demand-deficient unemployment and requires fiscal stimulus
The economy has entered a liquidity trap and monetary policy is ineffective
A rise in frictional unemployment is occurring alongside a tight labour market
Structural unemployment has fallen due to worsening skills mismatch
Seasonal unemployment is the dominant source of joblessness

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