How do you think each of the following would affect the unemployment rate?
a. The Fed increases the money supply and engineers an unexpected increase in the rate of inflation from 2 percent to 5 percent.
b. The rate of inflation remains stable at 2 percent over a five-year period, as expected.
c. There is an unexpected decrease in the rate of inflation from 10 percent to 3 percent.
a. An unanticipated increase in the rate of inflation should result in lower real wages and a lower unemployment rate in the short run.
b. Because the actual rate of inflation matches the expected rate, the unemployment rate won't change.
c. This unexpected reduction in inflation will raise real wages and cause the unemployment rate to rise in the short run.
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In the figure above, the shift in the supply curve for U.S. dollars from S0 to S1 could occur when
A) the U.S. interest rate rises. B) foreign interest rates rise. C) the expected future exchange rate falls. D) the current exchange rate rises.
The average tax rate is calculated as
A) total income divided by the total tax paid. B) the change in income divided by the change in total tax paid. C) total tax paid divided by total income. D) the change in total tax paid divided by the change in income.
Over the long haul, rapid increases in the supply of money lead to
What will be an ideal response?
Full marginal-cost pricing of water would lead to
a. More water use and higher water prices b. Less water use but no change in water prices c. Less water use and higher water prices d. Less water use and lower water prices e. More water use and lower water prices