If fiscal policy makers increase aggregate demand in an attempt to decrease the unemployment rate below the natural rate of unemployment, then:
a. the potential GDP will decrease
b. the potential GDP will increase.
c. the only lasting impact of the policy is a higher price level.
d. the only lasting impact of the policy is higher real GDP.
e. the only lasting impact of the policy is lower real GDP.
c
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When the economy is operating at an unemployment rate below the full employment rate,
a. actual output is above potential output b. actual output equals potential output c. actual output is below potential output d. frictional unemployment has been eliminated e. structural unemployment has been eliminated
If inflation in the United States rises relative to the inflation rate in Mexico, the dollar will __________ in terms of the peso and the peso will __________ in terms of the dollar
A) remain unaffected; appreciate B) remain unaffected; depreciate C) depreciate; remain unaffected D) depreciate; appreciate E) remain unaffected; remain unaffected