The natural rate hypothesis states that when the inflation rate
A) increases, the unemployment rate will decrease permanently.
B) changes, the unemployment rate changes temporarily and eventually returns to the natural unemployment rate.
C) decreases, the inflation rate will decrease permanently.
D) changes, the change is only temporary, and eventually the inflation rate returns to the natural inflation rate.
E) increases, the natural unemployment rate increases.
Question 2
When the U.S. government launched a massive rescue plan in response to the 2008-2009 financial crisis, the overall demand for loanable funds ________ because the ________.
A) decreased; demand by households, businesses, and financial institutions changed by the same amount as the federal government demand
B) did not change; demand by households, businesses, and financial institutions changed by the same amount as the federal government demand
C) increased; demand by households, businesses, and financial institutions increased as did the federal government demand
D) decreased; demand by households, businesses, and financial institutions decreased by more than the federal government demand increased
E) increased; demand by households, businesses, and financial institutions increased by more than the federal government demand increased
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