The economy's long-run aggregate supply curve ________.
A. slopes downward and to the right
B. slopes upward and to the right
C. is vertical
D. is horizontal
Answer: C
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If d is the depreciation rate and K is the capital stock, the amount of investment required to keep the economy in a steady state is given by:
A) I = d - K. B) I = d + K. C) I = d × K. D) I = d/K.
The relationship that says that the forward premium or discount is equal to the interest differential is
A) interest rate parity. B) purchasing power parity. C) the Fisher equation. D) the term structure of interest rates.
If policymakers set a target for unemployment that is too low because it is less than the natural rate of unemployment, this can set the stage for a higher rate of money growth and
A) cost-push inflation. B) demand-pull inflation. C) cost-pull inflation. D) demand-push inflation.
The sample average of the OLS residuals is
A) some positive number since OLS uses squares. B) zero. C) unobservable since the population regression function is unknown. D) dependent on whether the explanatory variable is mostly positive or negative.