If strong monetary policy stimulus is used to combat a recessionary gap, what will happen?
A. A rapid movement toward lower unemployment and higher inflation
B. A rapid movement toward lower unemployment and lower inflation
C. A slow movement toward lower unemployment and higher inflation
D. A slow movement toward lower unemployment and lower inflation
Answer: A
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If the growth of the quantity of money is 5 percent per year, potential and real GDP grow at 3 percent per year, and velocity does not change, in the long run what is the inflation rate?
What will be an ideal response?
The equilibrium effects of a temporary increase in total factor productivity include
A) an increase in the real wage and an increase in the real interest rate. B) an increase in the real wage and a decrease in the real interest rate. C) a decrease in the real wage and an increase in the real interest rate. D) a decrease in the real wage and a decrease in the real interest rate.
Government policy that decreases the value of its currency _________
a. is called devaluation b. is called an import control c. appreciates the exchange rate d. is helpful to importers e. is harmful to exporters
The law of demand suggests that most demand curves will be
A. a straight line. B. curved. C. downward-sloping. D. upward-sloping.