Over the period between 1960 and 2010, the increase in unemployment rate was the greatest in
A) early 1960s.
B) late 2000s.
C) mid 1970s.
D) early 1980s.
E) early 1990s.
B
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Refer to the above figure. Unexpected contractionary monetary policy has caused the aggregate demand curve to shift to AD2. In the short run
A) the unemployment rate will be larger than the rate before the contractionary monetary policy. B) the unemployment rate will be smaller than the rate before the expansionary monetary policy. C) the unemployment rate will be the same rate as before the expansionary monetary policy. D) the unemployment rate can increase or decrease depending upon how much the LRAS will shift.
If a firm is producing where MR > MC,
A) the revenue gained by producing one more unit of output exceeds the cost incurred by doing so. B) the revenue gained by producing one more unit of output equals the cost incurred by doing so. C) the revenue gained by producing one more unit of output is less than the cost incurred by doing so. D) the firm is already maximizing profits because revenue is being increased by more than costs.
In the 2007–2009 period, the expenditure level in the United States intersected the 45° line below potential GDP, causing
A. hyperinflation. B. a growing trade deficit. C. a government budget surplus. D. unemployment.
If money demand is extremely sensitive to changes in the interest rate, the money demand curve becomes almost horizontal. If the Fed expands the money supply under these circumstances, then the interest rate will
A) fall substantially and investment and consumer spending will fall substantially. B) rise substantially and investment and consumer spending will rise substantially. C) fall substantially and investment and consumer spending will change very little. D) change very little and investment and consumer spending will change very little.