Inflation frees policy makers from:
A. the zero interest rate upper bound.
B. the 2.5 percent interest rate lower bound.
C. the 2.5 percent growth rate bound.
D. the zero interest rate lower bound.
Answer: D
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In the steady state in the Solow growth model, the economy is in equilibrium with the capital-labor ratio and real GDP per worker ________, and with capital, labor, and real GDP ________
A) constant; constant B) growing; constant C) constant; growing D) growing; growing
What is the major problem in a currency union?
A) Money demand becomes more erratic. B) Participating central banks may not agree on monetary policy. C) It is akin to dollarization. D) The capital account becomes difficult to define.
A policy change that changes the natural rate of unemployment changes
a. neither the long-run Phillips curve nor the long-run aggregate supply curve. b. both the long-run Phillips curve and the long-run aggregate supply curve. c. the long-run Phillips curve, but not the long-run aggregate supply curve. d. the long-run aggregate supply curve, but not the long-run Phillips curve.
Which of the following government policies is least likely to increase the standard of living in the United States?
a. Investment in education and skills training for workers b. Raising the minimum wage paid to workers c. Investment in technology d. Investment in tools and capital for workers