Which of the following will most likely increase long-run aggregate supply?
a. an increase in the rate of investment
b. an increase in resource prices
c. an increase in the minimum wage
d. an increase in the expected inflation rate
A
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When the economy is operating at its natural rate of unemployment, the frictional and structural unemployment rates must add up to zero
Indicate whether the statement is true or false
Firms pay famous individuals to endorse their products because
A) famous people only consume high-quality products. B) apparently demand is affected not just by the number of people who use a product but also by the type of person that uses the product. C) famous people obviously know what are the best goods and services. D) the firms are irrational and are wasting advertising expenditures.
The experience of Paul Volcker's fight against inflation during the late 1970s and early 1980s indicates that firms and workers
A) had adaptive expectations. B) had rational expectations and that they trusted Fed announcements. C) preferred high unemployment to high inflation. D) Both A and B are correct answers.
The liquidity-preference model was first introduced in:
A. 2008 by Ben Bernanke. B. 1776 by Adam Smith. C. 1936 by John Maynard Keynes. D. 1970 by John Kenneth Galbraith.