Since classical economists and monetarists believe that the economy operates at full employment, real GDP, that is, along the vertical segment of aggregate supply:
a. any increase in the money supply can only end up raising the price level.
b. any increase in the money supply can only end up lowering the price level.
c. any decrease in the money supply can only end up raising the price level.
d. changes in the money supply will not affect the price level.
e. any increase in the money supply will cause both nominal and real GDP to increase.
Question 2
Eric lost his job because a recession caused his employer's sales to fall. This is an example of:
a. involuntary unemployment.
b. frictional unemployment.
c. structural unemployment.
d. cyclical unemployment.
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