Rapid increases in military spending by the federal government without accompanying increases in real output could be a cause of cost-push inflation

Households increase the quantity of labor supplied when the

A) real wage rate rises because the opportunity cost of not working rises. B) income tax rises because an increase in the income tax increases the demand for labor. C) nominal wage rate falls because the opportunity cost of not working rises. D) nominal wage rate rises because the real wage rate must also rise. E) real wage rate rises because the opportunity cost of not working falls.

Many economists argue that, in the long run, the economy self-corrects and achieves full employment. This argument is known as the:

a. natural rate hypothesis. b. incomes policy approach. c. political business cycle theory. d. Keynesian cross model.