The natural rate of unemployment is:
a. Fixed and unchanging in the long-run.
b. The rate that governments should use as their goal, in the sense that they should apply prudent monetary and fiscal policies to achieve it.
c. The unemployment rate to which a nation gradually moves if the real wage is free to fluctuate and the nation's actual inflation rate equals its expected inflation rate.
d. Basically a long term goal that no country every really achieves, but it serves as a Northern Star for policy makers.
e. None of the above.
Question 2
Which of the following statements about speculators is not true?
a. Speculators use the forward market extensively.
b. Speculators provide the foreign exchange market with liquidity
c. Speculators make foreign exchange markets more efficient.
d. Speculators cannot be completely shut out of the forward market, although the forward market is not intended for speculators.
e. Only major currencies have very liquid forward markets
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