Milton Friedman argued that as long as
A) the unemployment rate is higher than the inflation rate, the economy is not in long-run equilibrium.
B) Real GDP grows, the inflation rate will fall.
C) the expected inflation rate is not equal to the actual inflation rate, the economy is not in long-run equilibrium.
D) nominal wages rise, so do real wages.
E) none of the above
C
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The Discount Rate
Under Alan Greenspan, the Fed strived to hit its goals of price stability and high employment through
A) setting targets for rates of growth in the M1 and M2 money supplies. B) practicing discretionary monetary policy, reacting to counter-changes in the level of unemployment during recessions and booms. C) setting targets for the federal funds rate of interest. D) strict adherence to rules based strategies.
As real disposable income increases, consumption expenditures
A) increase by the same amount. B) increase by a smaller amount. C) increase by a larger amount. D) remain constant.
The present value of $1 payable in two years is
a. $1. b. $1/(1 + 2r). c. $1/(1 ? 2r). d. $1/(1 + r)2.