If real money demand doubles while the nominal money supply is unchanged, what happens to the price level?
A. The price level increases by a factor of four.
B. The price level is unchanged.
C. The price level doubles.
D. The price level falls by one-half.
Answer: D
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In an open economy with few capital restrictions and substantial import-export trade, a rise in interest rates and a decline in the producer price index of inflation will
a. raise the value of the currency b. lower the nominal interest rate c. increase the volume of trading in the foreign exchange market d. lower the trade-weighted exchange rate e. increase consumer inflation.
Full employment is the situation in which the economy operates at an unemployment rate equal to the sum of
a. structural and frictional unemployment. b. cyclical and frictional unemployment. c. structural and cyclical unemployment. d. structural, frictional, and cyclical unemployment.