Classicals argue that an adverse supply shock would
A. raise the natural rate of unemployment, but not the actual rate of unemployment.
B. raise neither the natural rate of unemployment nor the actual rate of unemployment.
C. raise both the natural rate of unemployment and the actual rate of unemployment.
D. raise the actual rate of unemployment, but not the natural rate of unemployment.
Answer: C
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Holding other factors constant, technological progress ________ the real wage and ________ employment.
A. decreases; increases B. increases; decreases C. increases; does not change D. increases; increases
How can one tell from cross elasticity what kind of relationship exists between any two goods?
What will be an ideal response?
In the simple deposit expansion model, a decline in checkable deposits of $500 when the required reserve ratio is equal to 20 percent implies that the Fed
A) sold $250 in government bonds. B) sold $100 in government bonds. C) sold $50 in government bonds. D) purchased $100 in government bonds.
Based on the theory of the expectations-augmented Phillips curve, if the expected inflation rate is 2%, the short-run Phillips curve will
A) have a kink at an inflation rate of 2%. B) be the same as the long-run Phillips curve. C) intersect the long-run Phillips curve at the natural unemployment rate, when the inflation rate is 2%. D) be horizontal at an expected inflation rate of 2%.