The natural real GDP will ________ following a rise in energy prices because
A) rise; labor productivity increases.
B) fall; labor productivity increases.
C) fall; real wages are flexible and employment is less attractive relative to leisure.
D) B and C are both correct.
C
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The combination of shocks hitting an economy is:
A. usually known to policymakers before they decide what action to take. B. hard to see without looking at lots of economic data. C. difficult to identify because they are so numerous. D. irrelevant as long as the rates of inflation and real growth are known.
Which of the following would decrease the value of the dollar in the long run?
A) an increase in U.S. tariffs on foreign goods B) a decrease in the demand for American goods relative to goods from other countries C) a decrease in inflation in the United States relative to other countries D) a decrease in the supply of dollars on the foreign exchange market