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?| |(- C ? (--. C ? secure I https:/ modiquuz/attempt.php?attemptsT77099&pa..; 27 t yet answered Points out of 20 r Flag questlon Labor adjustment costs help amplify the initial negative shock by Select one: o a. keeping the unemployment rate high der cur o b. blocking employment search efforts c.discouraging irreversible investments flation higher. O d. send [Rel Solv Question 28 Noty Points out of 2.0 P Flag question A re for t Intertemporal subsitution tends to magnify: Jour wrot stror dolla Want set qu Use Qu to learn Select one: o a. positive shocks only. u· b, neither negative nor positive shocks. O c. both negative and positive shocks. d, negative shocks only. Question 29 Not yet answered Points out of 20 F Flag question O Type here to search ?

Solution

27.

A

Under the labor adjustment cost, people tend to find new jobs, wait for the right job opportunities and it contributes to the search centric unemployment. As a result, unemployment rates become high due to amplification impact of labor adjustment cost.

28.

C

During the intertemporal substitution, there is tendency to work more when the return is high (booming economy) and tendency to work less when the return is less (recession phase of economy). So, it works when there is positive shock as well as negative shock.