Which of the following best approximates Okun's law?
A) a 1 percent increase in output leads to a 2 percent decrease in unemployment
B) a 1 percent increase in output leads to a 1 percent decrease in unemployment
C) a 2 percent increase in output leads to a 4 percent increase in unemployment
D) a 2 percent increase in output leads to a 1 percent decrease in unemployment
E) none of the above
D
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If the price of a good rises, then moving along a demand curve the percentage change in the quantity demanded will be
A) positive. B) negative. C) zero. D) either positive, negative, or zero depending on how the demand curve shifted. E) undefined.
In the figure above, the economy is at point A when the price level rises to 120. Money wage rates and other resource prices remain constant. Firms are willing to supply output equal to
A) $15.5 trillion. B) $16.0 trillion. C) $16.5 trillion. D) None of the above answers is correct.
Which of the following statements about transfer payments is true?
a. Transfer payments are not included in total government expenditures. b. Transfer payments involve the international remittance of funds. c. Transfer payments refer to the transfer of money by the commercial banks to the people. d. Transfer payments are made by the government to taxpayers. e. Transfer payments are made when governments purchase goods and services.
Using the equation of exchange, the existence of a natural rate of unemployment implies that in the long run:
A. Quantity of real output in the equation of exchange varies in proportion to money supply. B. Velocity in the equation of exchange is actually very unstable. C. The rate of unemployment can be permanently reduced by more expansionary monetary and fiscal policies. D. Monetary policy affects only the rate of inflation.