When the actual unemployment rate is greater than the natural rate of unemployment, the inflation rate
A. tends to increase.
B. tends to decrease.
C. falls to zero.
D. remains unchanged.
Answer: B
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If the money multiplier is 10, the purchase of $1 billion of securities by the Fed on the open market causes a
A) $10 billion decrease in the money supply. B) $1 billion decrease in the money supply. C) $1 billion increase in the money supply. D) $10 billion increase in the money supply.
In the Keynesian model, which of the following will cause a reduction in interest rates?
A) An increase in money demand B) An increase in money supply C) An increase in saving D) A decline in saving
If the interest rate is 10%, then $1 received one year from now is worth how much today?
A) $1.10 B) $1.00 C) $0.91 D) $0.90
Suppose the principal offers to share a percentage of the profit with the agent. Such a contract
A) will yield the same income for the agent as a hire contract would. B) is incentive compatible. C) creates a production inefficiency. D) would not be acceptable to any agent.