The following shows the effect of the business cycle on the inflation rate and the unemployment rate:
A. The unemployment rate increases and the inflation rate increases during expansion
B. The unemployment rate increases and the inflation rate falls during expansions
C. The unemployment rate increases and the inflation rate falls during recessions
D. The unemployment rate falls and the inflation rate falls during recessions
Answer: C. The unemployment rate increases and the inflation rate falls during recessions
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Any point on the aggregate demand schedule must also be
A) a point that clears the market for real money balances. B) a combination of real interest rates and income where aggregate desired expenditures is in balance. C) a point where money demanded is equal to money supplied. D) all of the above.
If the annual interest rate is 0%, the net present value of receiving $550 in the next year is:
a. $550 b. $551. c. $549 d. $500
For economists, substitutes for laboratory experiments often come in the form of
a. natural experiments offered by history. b. untested theories. c. "rules of thumb" and other such conveniences. d. reliance upon the wisdom of elders in the economics profession.
Between the two ordered pairs (3, 6) and (7, 18), the slope is
a. 1/3 b. -1/3. c. 3. d. -3.