According to Okun's law, when cyclical unemployment increases by one percentage point, the recessionary gap ________ by ________ percent of potential output.

If capital per worker rises

A) labor productivity decreases. B) no technological progress occurs. C) labor productivity increases. D) firms respond by raising their prices.

Official intervention in the foreign exchange market to defend a fixed-exchange rate when the value of the country's currency is under downward pressure causes

A. no change in the liabilities of the central bank. B. international reserve holdings to fall. C. the domestic money supply to rise. D. a downward pressure on the country's interest rates.