Suppose the measured unemployment rate is 6.1% and the true natural rate of unemployment is 5.1%. If the chair of the Fed believes the natural rate of unemployment to be 6.7%, then the chair will
A) stimulate the economy when it should be slowed.
B) slow the economy when it should be stimulated.
C) stimulate the economy, exactly as called for.
D) slow the economy, exactly as called for.
B
You might also like to view...
Changes in the demand for an industry's output are felt most by those factors that
a. are inelastically supplied. b. are paid the highest factor prices. c. earn relatively little economic rent. d. have a sizable number of alternative uses.
The major factor contributing to the depreciation of the Euro in 1999 and 2000 was:
A) low interest rates in the U.S. relative to Europe. B) high interest rates in the U.S. relative to Europe. C) trade barriers in Europe. D) none of the above.
If nominal or money GDP increases 6 percent in 2011 (compared to 2010), and real GDP increases 4 percent over the same period, which of the following must be true?
a. Exports exceeded imports. b. The general price level as measured by the GDP deflator fell during 2011. c. The economy entered a recession in 2011. d. Inflation during 2011 was 2 percent.
A policy of maintaining stable interest rates during economic fluctuations will tend to reinforce these fluctuations. A policy of maintaining a constant growth rate in the money supply will tend to cause interest rates to fluctuate, which can cause undesirable fluctuations in investment
Indicate whether the statement is true or false