Which of the following will always be true when an economy is in long-run equilibrium?
a. The level of prices will be constant (that is, inflation will be zero).
b. Actual output will exceed the potential output.
c. The actual rate of unemployment will be less than the natural rate of unemployment.
d. The output of the economy will correspond with the full-employment output.
D
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Suppose the tax rate on interest income is 25 percent, the real interest rate is 4 percent, and the inflation rate is 4 percent. In this case, the real after-tax interest rate is
A) 4.0 percent. B) .5 percent. C) 2.0 percent. D) 1.0 percent. E) 3.5 percent.
An innovation cycle could be caused by
a. a decreasing capital stock b. a sharp increase in national income c. a climatic change d. a sharp increase in the pace of technological change e. a decrease in the demand for housing