There is an adverse supply shock. In response the Federal Reserve pursues an expansionary monetary policy. Taking into account both the shock and the Federal Reserve's policy, which of the following are we sure of?
a. unemployment will be higher
b. unemployment will be lower
c. inflation will be higher
d. inflation will be lower
c
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The assumption that firms meet the demand for their products at preset prices is the key assumption upon which ________ is built.
A. the supply and demand model B. the basic Keynesian model C. Say's Law D. quantity equation for money
According to the Real Business Cycle model real wages should
A) remain constant. B) fall during recessions. C) rise during recessions. D) stay the same during recessions but rise during expansions.
Wages often respond slowly to changes in output
a. True b. False
In a free market for rental housing, effective rent control would have which effect?
a. It would cause a reduction in the number of apartments. b. It would cause an increase in the number of apartments, since landlords would try to increase their profits through larger scale. c. It would have no effect on the number of apartments offered in the market. d. The results are impossible to predict.