The demand for money will be high in an economy experiencing:
a. a depression
b. hyperinflation.
c. deflation.
d. a recession.
e. a sluggish population growth.
b
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The short-run Phillips curve is downward sloping because
A) the expected inflation rate is zero in the short run. B) the economy always returns to full employment. C) reducing the unemployment rate will reduce the inflation rate in the short run. D) in the long run, the expected inflation rate equals the actual inflation rate. E) the unemployment rate can be above or below the natural unemployment rate.
Lucas argues that when policies change, expectations will change thereby
A) changing the relationships in econometric models. B) causing the government to abandon its discretionary stance. C) forcing the Fed to keep its deliberations secret. D) making it easier to predict the effects of policy changes.
The real interest rate is calculated as the
a. expected rate of inflation divided by the nominal interest rate b. real GDP plus the expected rate of inflation c. nominal interest rate minus real GDP d. nominal interest rate minus the expected rate of inflation e. real GDP multiplied by the expected rate of inflation
Banks are considered a safer place to deposit money now than they were prior to 1933 because
a. gold reserves have increased. b. reserve requirements are higher. c. the creation of the FDIC reduced the likelihood of bank runs. d. the commercial banks are no longer permitted to extend loans to the Federal Government.