The natural rate hypothesis states that when the inflation rate
A) increases, the unemployment rate will decrease permanently.
B) changes, the unemployment rate changes temporarily and eventually returns to the natural unemployment rate.
C) decreases, the inflation rate will decrease permanently.
D) changes, the change is only temporary, and eventually the inflation rate returns to the natural inflation rate.
E) increases, the natural unemployment rate increases.
B
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If government expenditures on goods and services increases by $20 billion, then aggregate demand
A) increases by $20 billion. B) increases by more than $20 billion. C) decreases by $20 billion. D) increases by less than $20 billion. E) decreases by more than $20 billion.
The Federal Reserve buying government bonds is considered:
a) easy money. b) tight money. c) expansionary monetary policy. d) contractionary monetary policy.