The potential output of an economy is the level of output produced when the:
a. real wage equals the nominal wage.
b. price level is constant.
c. expected real wage equals the nominal wage.
d. seasonal unemployment rate is zero.
e. expected price level equals the actual price level.
Question 2
Other things constant, the quantity of money demanded varies:
a. directly with the market interest rate.
b. inversely with the market interest rate.
c. inversely with the price level.
d. directly with the price level.
e. inversely with the unemployment rate.
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