If the actual GDP is less than potential GDP
What will be an ideal response?
the actual unemployment rate will be higher than the natural unemployment rate
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If the nominal interest rate in an economy is 6% and the inflation rate in the economy is 10%, then the real interest rate is:
A) -6%. B) 10%. C) 6%. D) -4%.
If an average cost pricing rule is imposed on the natural monopoly shown in the figure above, then the firm's economic profit will be
A) $9 million. B) $12 million. C) $0, that is, the firm's owners make only a normal profit. D) negative, that is, the firm incurs an economic loss.
If the required reserve ratio is a uniform 25 percent on all deposits, the money multiplier will be:
A. 4.00. B. 2.50. C. 0.40. D. 0.25.
If the Fed buys U.S. Treasury bills and bonds to finance deficits, this means that the government is financing the deficit by expanding the money supply, which will eventually lead to
A. excess aggregate supply. B. deflation. C. excess aggregate demand. D. an appreciation of the dollar.