An economic recession produces
A) a decrease in cyclical unemployment.
B) an increase in structural unemployment.
C) a decrease in natural unemployment.
D) an increase in cyclical unemployment.
E) an increase in natural unemployment.
Question 2
In the figure above, in the long run what happens if the Fed increases the quantity of money by 5 percent?
A) The value of money rises by 5 percent.
B) The nominal interest rate rises by 5 percent.
C) The price level rises by 5 percent and the LRMD shifts leftward.
D) The value of money falls by 5 percent and there will be a movement down along the LRMD curve.
E) The real interest rate falls and the LRMD curve shifts rightward.
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