The natural rate hypothesis asserts that
A) changes in the unemployment rate from changes in the inflation rate are temporary.
B) changes in the unemployment rate are natural and long-lasting.
C) when prices change, the inflation rate changes temporarily and then returns to its natural rate.
D) changes in the natural unemployment rate are only temporary.
E) price changes occur at a natural rate, near a 6 percent average inflation rate.
A
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If we assume only one factor (labor), we can demonstrate on the PPF the opportunity cost of producing less of one good and more of the other good by:
a. taking the sum of the marginal products of labor for the two goods. b. taking the difference of the marginal products of labor for the two goods. c. taking the ratio of the marginal products of labor for the two goods times -1. d. taking the average of the marginal products of labor for the two goods.
Currency outside of banks increases from $100 million to $200 million. This change is considered
A) a currency drain. B) a decrease in the monetary base. C) expansionary monetary policy. D) contractionary monetary policy.