The income that people earn in resource or factor markets is called:

If the Fed tries to lower the unemployment rate so it is lower than the natural unemployment rate, before the expected inflation rate changes, the inflation rate ________ and the unemployment rate ________

A) does not change; falls B) falls; falls C) rises; does not change D) falls; rises E) rises; falls

Consider an economy where the money supply is growing at 7 per cent per year and velocity is constant. Which of the following statements about real GDP growth and the inflation rate could be TRUE if the Quantity Theory of Money holds?

A. Real GDP is growing at 2 per cent and inflation is 5 per cent. B. Real GDP is growing at 7 per cent and inflation is 7 per cent. C. Real GDP is growing at 2 per cent and inflation is 9 per cent. D. Real GDP is growing at 9 per cent and inflation is 2 per cent.