Figure 14-6
In the situation shown in , how could the Fed return the economy to potential output?
a.
decrease government spending
b.
decrease taxes
c.
sell U.S. government bonds to banks
d.
lower the discount rate
e.
lower the required reserve ratio
c
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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 the quantity of money grows at 3 percent per year, velocity does not grow, and real GDP grows at 2 percent per year, then the inflation rate equals
A) -1 percent. B) 1 percent. C) 6 percent. D) 5 percent. E) 12 percent.
Average weekly hours in manufacturing is an example of a:
A) leading indicator. B) coincident indicator. C) lagging indicator. D) none of the above.
U.S. residents bear the burden of unemployment equally
a. True b. False