The long-run policy prescription that comes from the natural-rate-of-unemployment discussion is:
a. Governments and central banks should adjust monetary and fiscal policies to keep unemployment and inflation as low and predictable as possible.
b. Governments and central banks should use monetary and fiscal policies to keep inflation as low and predictable as possible.
c. Real wages should not be allowed to change in the short run.
d. Fiscal and monetary policies are excellent ways to adjust the natural rate of unemployment.
e. Governments and central banks should use monetary and fiscal policies to keep unemployment as low and predictable as possible.
Question 2 - The forward exchange market:
a. Is the market for current delivery.
b. Is the market for current deliveries but future payments.
c. Handles transactions for individuals or companies who would like to reduce foreign exchange risk by locking in exchange rates now.
d. Is a market with no default risk.
e. Provides sufficient liquidity for any maturity and amount.
Question 3 - Suppose the economy was in equilibrium, and the national government increased spending by an expected amount equal to 200 billion. Monetarist theory would predict that:
a. Aggregate demand will rise, causing only real GDP to rise.
b. The real risk-free interest rate will rise, but real GDP will remain the same.
c. Aggregate demand will fall, and real GDP will fall.
d. Aggregate demand will rise causing only prices to rise.
e. Aggregate demand will rise causing both prices and real GDP to rise.
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