If the natural rate of unemployment is 6%, but the Fed thinks it is 5% and attempts to use monetary policy to move unemployment from 6% to 5%, then in the short run which of the following variables will the Fed's policy raise?
a. the price level and real GDP
b. the price level but not real GDP
c. real GDP but not the price level
d. neither real GDP nor the price level
a
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The basic cause of deadweight losses from the existence of common resources and externalities is
A) the use of a market system to deal with scarcity. B) the self-interested rationality of human beings. C) the absence of government intervention. D) a lack of clearly defined and enforceable property rights.
As described in the text, which of the following statements best describes the strategy of many potato growers since 2005?
A) Growers have worked together to reduce supply and stabilize demand. As a result, equilibrium price has been propped up and allowed farmers to earn what they consider a decent profit. B) Growers have continued to compete vigorously with each other, causing prices and profits to decrease. C) Growers have restricted supply so much that there is now a severe shortage of potatoes in the United States. D) because efforts by potato growers to restrict supply are illegal in the United States, they have focused exclusively on increasing demand to increase their profits.
If real wages fall as output rises, then in the classical model it must be the case that
a. labor demand rose. b. labor demand fell. c. labor supply rose. d. labor supply fell. e. none of the above.
The expenditure lags between fiscal actions and their effects on aggregate demand are probably fairly short.
Answer the following statement true (T) or false (F)