Which of the following is true of the natural rate of unemployment?
A) The actual rate of unemployment is higher than the natural rate of unemployment during a recession.
B) The natural rate of unemployment excludes long-term structural unemployment.
C) The natural rate of unemployment is the socially optimal or desirable rate of unemployment.
D) The natural rate of unemployment excludes frictional unemployment.
A
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Which of the following statements about the real loanable funds market is not true?
a. Movements in the real risk-free interest rate cause significant changes in borrowers' willingness and ability to tap the domestic credit market if the demand is highly elastic. b. The more inelastic a nation's supply of real loanable funds, the less sensitive domestic savers, banks, foreigners, and governments are to changes in the real risk-free interest rate. c. Monetary policy is usually stronger in nations with inelastic real loanable funds demands. d. Fiscal policy is usually weaker in nations with elastic real loanable funds demands. e. All of the above are true.
The United States is experiencing a recession and Congress decides to adopt an expansionary fiscal policy to stimulate the economy. In this case, the crowding-out effect suggests that investment spending would:
A. decrease, thus decreasing aggregate demand and partially offsetting the fiscal policy. B. increase, thus decreasing aggregate demand and partially offsetting the fiscal policy. C. increase, thus increasing aggregate demand and partially reinforcing the fiscal policy. D. decrease, thus increasing aggregate demand and partially offsetting the fiscal policy.