Using the equation of exchange, the existence of a natural rate of unemployment implies that in the long run:
A. Quantity of real output in the equation of exchange varies in proportion to money supply.
B. Velocity in the equation of exchange is actually very unstable.
C. The rate of unemployment can be permanently reduced by more expansionary monetary and fiscal policies.
D. Monetary policy affects only the rate of inflation.
Answer: D
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Average cost is the cost of producing the next unit
a. True b. False Indicate whether the statement is true or false
The final element of a financial crisis is
a. an economic downturn. b. a decline in confidence in financial institutions. c. declining prices of real estate or other assets. d. a vicious circle.
Which of the following types of unemployment is most likely the cause of higher- than-normal unemployment when an economy enters recession?
a. cyclical b. frictional c. seasonal d. structural
If a bank has actual reserves of $40,000 and a 20 percent reserve requirement, then the maximum amount of checkable deposits the bank can have if excess reserves are zero is:
A. $200,000. B. $80,000. C. $300,000. D. $20,000.