The natural rate hypothesis argues that the economy will:
A. self-correct to the natural rate of inflation.
B. require expansionary fiscal policy to reach the natural rate of unemployment.
C. self-correct to the natural rate of unemployment.
D. require expansionary monetary policy to reach the natural rate of unemployment.
Answer: C
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SeaSide Industries currently spends 5 percent of its sales on advertising. Suppose that the elasticity of advertising for Seaside is 0.2. Determine the optimal profit margin over price (P ? MC)/P.
A. 4 percent B. 25 percent C. 10 percent D. None of the answers is correct.
As you move down the production possibility frontier, the absolute value of the marginal rate of transformation
A. increases. B. initially decreases, then increases. C. decreases. D. initially increases, then decreases.
When every good or service is produced up to the point where the last unit provides ________, allocative efficiency occurs
A) a marginal benefit to society greater than the marginal cost of producing it B) a marginal benefit to society equal to the marginal cost of producing it C) a marginal benefit to society less than the marginal cost of producing it D) a marginal benefit to society equal to zero
The main reason the United States established a central bank was
a. a desire for a strong centralized financial authority. b. to follow the conclusions of economic theory. c. severe inflation after the Civil War. d. disastrous experiences with financial panics.