The integration of expectations into macroeconomic analysis indicates that
a. fiscal policy is more potent than monetary policy.
b. monetary policy is more potent than fiscal policy.
c. once people come to expect a given rate of inflation, the inflation will neither stimulate real output nor reduce unemployment.
d. higher rates of inflation will lead to lower rates of unemployment in the long run but not in the short run.
C
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Advances in productivity increase supply because they might
A) increase the price expected in the future. B) decrease the cost of production. C) increase the number of firms producing the good. D) raise the prices of resources used to produce the good. E) decrease the number of goods available.
A falling natural-employment deficit indicates that
A) the growth rate in the economy has increased. B) the government is following a restrictive fiscal policy. C) the government is following an expansionary fiscal policy. D) the actual surplus is rising.