Question

C) the economy naturally self-regulates so as to attain full employment at its equilibrium D) the short-run aggregate supply (SRAS) curve is always vertical. 18) In the classical model, an increase in the unemployment rate 18 A) will likely be temporary B) will result in an increase in the price level if the reduction in output is caused by a change in aggregate demand C) is a signal of demand-pull inflation. D) will persist when the reduction in output is caused by a reduction in aggregate demand 19) An example of an increase in gross private domestic investment spending that also increases Gross 19) Domestic Product (GDP) is when A) a family sells its home because of a transfer. B) government increases spending on infrastructure C) a farmer buys a used tractor. D) inventories of new cars accumulate on the lots of car dealers. 20) Which of the following people would be considered unemployed? 20) A) Edna, who lost her job as a teacher and is currently searching for a new job B) Abe, who is retired C) Lenny, who is working part time at a fast food restaurant D) Homer, who lost his job at the power plant and is not looking for work 21) When the required reserve ratio is 20 percent, a Fed open market sale of $500,000 can ultimately 21) lead to a maximum potential reduction in the money supply of A) $100,000 B) $500,000. C) $2,500,000. D) $5,000,000.

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