The Fed tried to reduce unemployment in the years following the recession of 2001 by:
A. reducing the growth rate of the money supply.
B. increasing government spending on construction projects.
C. keeping the Federal funds rate very low.
D. raising the reserve requirement for banks.
Ans: C. keeping the Federal funds rate very low.
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The process of an economy adjusting from a recession back to potential GDP in the long run without any government intervention is known as
A) fiscal policy. B) monetary policy. C) an automatic mechanism. D) "releasing sticky prices."
Which of the following pieces of information do you need to calculate the labor force participation rate?
I. the number of employed persons II. the number of unemployed persons III. the population IV. the working age population A) I, II and IV B) I and III C) I and II D) I, II and III E) all of the above
The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
The Case in Point on "baldness and heart disease" suggests that by preventing baldness:
A) men can reduce the likelihood they will develop colon cancer. B) men are unlikely to influence their chances of having heart problems. C) men are likely to reduce their chances of having heart problems. D) men can live longer.