Explain the natural unemployment rate and its relationship to inflation rate
What will be an ideal response?
The natural unemployment rate is the unemployment rate at which the inflation rate remains constant. When the actual unemployment rate exceeds the natural rate of unemployment, the inflation rate typically decreases; when the actual unemployment rate is less than the natural unemployment, the inflation rate typically increases.
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If a shift in the demand curve that raises the price of oranges from $7 to $9 a bushel increases the quantity of oranges supplied from 4,000 bushels to 6,000 bushels, the
A) supply of oranges is elastic. B) supply of oranges is inelastic. C) demand for oranges is elastic. D) demand for oranges is inelastic.
Refer to Figure 26-10. In the figure above, suppose the economy is initially at point A. The movement of the economy to point B as shown in the graph illustrates the effect of which of the following policy actions by the Federal Reserve?
A) an open market purchase of Treasury bills B) a decrease in the required reserve ratio C) an open market sale of Treasury bills D) an increase in income taxes