A situation in which output decreases while prices increase is often referred to as:

How will the purchase of $100 million of government securities by the Federal Reserve change bank reserves and total checking account deposits in the banking system as a whole? Assume that banks do not hold any excess reserves, that households and

firms do not change the amount of currency they hold, and that the required reserve ratio is 20 percent.

Suppose policy makers overestimate the natural rate of unemployment. In situations like these, policy makers will likely implement policies that result in

A) less unemployment than necessary. B) an unemployment rate that is "too low." C) a lower inflation rate than necessary. D) a steadily increasing inflation rate. E) overly expansionary monetary and fiscal policy.