On the long-run Phillips curve, the unemployment rate
A) equals the natural unemployment rate, but the inflation rate can be any value.
B) decreases when the inflation rate increases.
C) equals the natural unemployment rate, and the inflation rate equals the expected inflation rate.
D) can be any value, but the inflation rate equals the expected inflation rate.
E) and inflation rate can take any value.
Question 2
Suppose the government's budget deficit increases by 500 billion. If there is no Ricardo-Barro effect, what occurs?
A) The supply of loanable funds curve shifts leftward, the real interest rate rises, and the quantity of loanable funds decreases.
B) The supply of loanable funds curve shifts rightward, the real interest rate falls, and the quantity of loanable funds increases.
C) The demand for loanable funds curve shifts rightward, the real interest rate rises, and the quantity of loanable funds increases.
D) The demand for loanable funds curve shifts leftward, the real interest rate falls, and the quantity of loanable funds decreases.
E) The supply of loanable funds curve shifts leftward, the real interest rate rises, and the quantity of loanable funds increases.
An Inverted U Curve
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