The natural rate hypothesis concludes that when the inflation rate increases, then in the long run there is
A) an upward movement along the short-run Phillips curve.
B) an upward shift of the short-run Phillips curve.
C) a downward shift of the short-run Phillips curve.
D) no change at all in the short-run Phillips curve.
E) a downward movement along the short-run Phillips curve.
B
Economics
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A bank seeks a 4% real return on its loans and predicts a 4% annual rate of inflation. It should therefore charge a nominal interest rate of
A) 0%. B) 1%. C) 4%. D) 8%. E) 12%.
Economics
If the government purchases multiplier equals 2, and real GDP is $14 trillion with potential real GDP $14.5 trillion, then government purchases would need to increase by ________ to restore the economy to potential real GDP
A) $7.25 trillion B) $1 trillion C) $500 billion D) $250 billion
Economics