Author Question: As firms expect future profits to increase, they increase their investment. As a result, real GDP ... (Read 73 times)

sheilaspns · **on:** Jun 29, 2018

As firms expect future profits to increase, they increase their investment. As a result, real GDP rises above potential GDP. If the Fed followed Friedman's k-percent rule, the Fed would

A) continue allowing the quantity of money to grow at k percent.
B) increase the quantity of money more than usual.
C) decrease the quantity of money.
D) raise the federal funds rate.
E) lower the federal funds rate.

Question 2

The concept of human capital describes

A) human skills, that is, the quality of labor.
B) human population, that is, the quantity of labor.
C) the number of machines per employed worker.
D) the number of workers per operating machine.
E) the number of machines (capital) that have been produced by people (humans).