The Friedman natural rate theory holds that there is an inverse relationship between inflation and unemployment in the long run, but not in the short run

One of the criticisms of Basel 2 is that it is procyclical. That means that

A) banks may be required to hold more capital during times when capital is short. B) banks may become professional at a cyclical response to economic conditions. C) banks may be required to hold less capital during times when capital is short. D) banks will not be required to hold capital during an expansion.

Which of the following is most likely to occur during recession?

a. Increase in wage rate b. Decrease in potential real GDP c. Increase in the market rate of interest d. Decrease in the average price level e. Decrease in the government transfer payments