If the Federal Reserve attempts to continue reducing unemployment by manipulating monetary policy, which of the following would you expect to see?
A) The rate of inflation will fall as the Fed tries to reduce the unemployment rate.
B) The Fed's policies will be deflationary.
C) The Fed's policies will be inflationary.
D) The Fed will reduce the natural rate of unemployment.
C
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The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
Refer to the information provided in Table 36.3 below to answer the question(s) that follow. Table 36.3 PointAggregate Income (Y)Aggregate Consumption (C) A 15 19 B 30 23 C 45 27 D 60 31 E 75 35 F 90 39The data in the table was used to estimate the following consumption function: C = 20 + 0.2YRefer to Table 36.3. The error for point E is equal to
A. -2. B. 0. C. +1. D. +3.