As actual output falls below the potential level in the short run, which of the following is most likely to occur?
a. More resources will become unemployed.
b. The price level will increase.
c. Real GDP will increase.
d. Nominal GDP will remain constant.
e. The natural rate of unemployment will fall.
Question 2
An increase in the money supply leads to a(n):
a. decline in interest rates, an increase in investment, and an increase in aggregate demand.
b. decline in interest rates, a decrease in investment, and an increase in aggregate demand.
c. decline in interest rates, an increase in investment, and a decline in aggregate demand.
d. increase in interest rates, an increase in investment, and an increase in aggregate demand.
e. decline in interest rates, a decline in investment, and a decline in aggregate demand.
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