From the late 1980s to 2000, the natural rate of unemployment
A. held constant.
B. fluctuated up and down, following the path of the actual rate of unemployment.
C. climbed sharply.
D. gradually declined.
Answer: D
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Suppose an economy has no income taxes or imports. If the MPC is 0.75, what does the expenditure multiplier equal?
What will be an ideal response?
If the yield curve slope is flat for short maturities and then slopes steeply upward for longer maturities, the liquidity premium theory (assuming a mild preference for shorter-term bonds) indicates that the market is predicting
A) a rise in short-term interest rates in the near future and a decline further out in the future. B) constant short-term interest rates in the near future and further out in the future. C) a decline in short-term interest rates in the near future and a rise further out in the future. D) constant short-term interest rates in the near future and a decline further out in the future.