An economy is at full employment when ________
A) the unemployment rate is zero
B) there is no frictional unemployment
C) the unemployment rate equals the natural unemployment rate
D) there is no structural unemployment
C
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In general, fiscal policy is used to:
A. make business cycle booms bigger and busts smaller. B. even out the booms and the busts in the business cycle. C. to reverse the pattern of booms and busts in the business cycle. D. make business cycle booms and busts both bigger.
"If the money supply rises by $1 billion, GDP will rise until it alone increases the quantity of money demanded by $1 billion." This describes the situation when
A) an IS curve shifts against a horizontal LM curve. B) an IS curve shifts against a vertical LM curve. C) a vertical LM curve shifts against an IS curve. D) a horizontal LM curve shifts against an IS curve.