To maintain an interest rate target the Fed must make adjustments to the money supply
a. True
b. False
A
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The United States' economy would be operating at full employment with labor unemployment rate of ___ percent and a capacity utilization rate of _____ percent.
A. 5; 95 B. 5; 85 C. 10; 95 D. 10; 85
If inflation falls from 11% to 5%, there is deflation
Indicate whether the statement is true or false
Suppose Beth Dollins, Nike's CEO, decides to produce 1 million pairs of cross-training shoes, but when the shoes reach the market, consumers decide to buy only 600,000 pairs. Assuming Nike's situation is similar to other producers, the most likely resulting scenario would be
a. an increase in overall production and an increase in the economy's unemployment b. a cutback in overall production and an increase in the economy's unemployment c. a decrease in real GDP and a decrease in the economy's unemployment d. a decrease in real GDP and no effect on the economy's unemployment e. no change, because Nike will not alter its production plans due to short-run market changes
The economy's self-correcting mechanism ensures that neither recessionary nor inflationary gaps will be eliminated eventually
a. True b. False Indicate whether the statement is true or false