1) Suppose you knew that the NAIRU (the nonaccelerating inflation rate of unemployment) was 7 percent. The current unemployment rate is 6 percent.
a) An increase in government spending is more likely to increase
- prices, not output.
- neither prices, nor output.
- prices and output.
- output, not prices.
b) Now the unemployment rate rises to 8 percent, but the NAIRU stays the same. In this case, an increase in government spending is more likely to increase
- prices and output.
- prices, not output.
- output, not prices.
- neither prices, nor output.
2)State whether each condition is consistent with either a medium of exchange, a store of value, or a standard of value.
a) You put part of your paycheck into a 401(k) retirement plan.
- Store of value
- Standard of value
- Medium of exchange
b) You purchase an Amazon Echo.
Medium of exchange
- Store of value
- Standard of value
c) You notice that the price of a cafe latte, which you drink each morning on the way to work, increases by 50 cents.
- Medium of exchange
- Standard of value
- Store of value
d) You receive payment for doing your neighbor's taxes.
- Store of value
- Standard of value
- Medium of exchange