The nominal cost per unit of output rises when production is pushed beyond an economy's potential output.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 2In the long run, a change in the money supply does not affect the natural rate of unemployment because:
a. the aggregate demand curve is vertical.
b. the aggregate demand curve is downward sloping.
c. the long-run aggregate supply curve is vertical.
d. the long-run aggregate supply curve is upward sloping.
e. the long-run aggregate supply curve is horizontal.
QUESTION 3The natural rate of unemployment includes frictional, cyclical, and structural unemployment.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4The quantity theory of money states that if the velocity of money is stable or at least predictable, then:
a. the quantity of money in circulation determines real GDP in the short run.
b. the quantity of money in circulation determines aggregate spending.
c. the quantity of money in circulation determines both real GDP and the price level in the long run.
d. the quantity of money in circulation determines only the price level in the long run.
e. the quantity of money in circulation determines the potential output in the long run.
QUESTION 5At the potential level of output, there is no seasonal unemployment.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 6If real output and velocity are stable and predictable, then the equation of exchange can be used to derive a simple relationship between:
a. the money supply and the price level.
b. the money supply and the interest rate.
c. the money supply and the foreign exchange rate.
d. unemployment and aggregate demand.
e. unemployment and nominal GDP.
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