Which of the following statements accurately expresses the assumptions on which new Keynesian and new classical theory are based?
a. New Keynesian economics assumes that the economy can reach equilibrium below thenatural rate of unemployment, whereas new classical economics assumes thatmacroeconomic equilibrium is always at the natural rate of unemployment
b. New Keynesian economics maintains that government intervention is unnecessary,whereas classical economics supports an active government role.
c. New Keynesian economics assumes that the long-run Phillips curve is vertical,whereas new classical economics views the long-run Phillips curve as horizontal.
d. New Keynesian economics assumes that all prices are flexible, whereas new classical economics applies a fixed-price model.
e. New Keynesian economics emphasizes short-run reductions in inflation rates, whereas new classical economics focuses on short-run reductions in the unemployment rate.
a
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The Bank of Pitland, which is the highest financial institution in Pitland, has bought treasury bonds worth $2.2 billion from a private bank. How will this transaction affect the balance sheets of the private bank and the Bank of Pitland?
What will be an ideal response?
A minimum wage law
A) lowers the wage rate of workers who are able to get a job. B) increases employment. C) increases the time spent searching by workers who cannot find a job. D) creates efficiency in the labor market. E) must be set below the equilibrium wage rate in order to have an impact.
In the long run in a perfectly competitive market:
A. firms earn positive economic profits. B. supply is perfectly inelastic when all firms have the same cost structure. C. firms operate at an efficient scale. D. All of these are true.
Of the following recessionary periods in the United States, in which was the inflation rate the lowest?
A. 1974-1975 B. 1980-1982 C. 1990-1991 D. 2008-2009