The longer the unemployment rate remains above the natural rate, the higher the natural rate. This theory is known as historical analysis
a. True
b. False
Indicate whether the statement is true or false
False
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Which of the following statements best describes the rational expectations hypothesis?
A) Individuals will not enter into long-term agreements unless they are certain about the payments they will receive. B) It is likely that individuals will consistently make errors. C) Individuals will make random errors, independent of previous errors. D) It is reasonable to expect individuals to consistently underestimate the level of inflation.
Falling output, in the short run, could be due to:
A. an increase in short-run aggregate supply. B. a reduction in aggregate demand. C. an increase in long-run aggregate supply. D. an increase in aggregate demand.
The level of GDP, all else held constant, will tend to increase when ________.
A. reserve requirements are increased B. there is an increase in the discount rate C. the federal funds rate is increased D. the Federal Reserve buys government securities in the open market
A shift in the demand curve will occur when
A. suppliers place more goods on the market. B. the price of a good rises. C. consumers want to buy more or less than before at a given price. D. the price of the good falls.