When the economy switches production toward services and away from manufacturing and workers in the manufacturing industry are permanently laid off
A) frictional unemployment decreases.
B) structural unemployment increases.
C) cyclical unemployment increases.
D) frictional and cyclical unemployment increase.
B
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What was the purpose of the stress test administered by the Treasury in 2009?
A) Evaluate potential losses of Fannie Mae and Freddie Mac. B) Assess the viability of AIG. C) Gauge how well the largest financial firms would fare if the recession deepened. D) Evaluate the solvency of the major investment banks.
Rising inflation causes quantity demanded to decline, because ________
A) the central bank raises the nominal interest rate by more than the increase in expected inflation B) households and businesses are reluctant to spend when prices rise C) higher inflation causes the IS curve to shift to the left D) all of the above E) none of the above