Question Details

If monetary policy targets on an unemployment level less 



1. If the rate of money growth increases in a fully-employed economy you should 
a) wait to see what happens b) buy bonds because their price should soon rise 
c) sell bonds because their price should soon fall 
d) not worry because bond prices should not change 
2. If monetary policy targets on an unemployment level less than the natural rate of unemployment, then over time 
a) the interest rate should rise b) the exchange rate should rise 
c) both real and nominal wages should fall 
d) the interest rate and GDP should remain roughly constant 
3. If in a fully-employed economy the rate of growth of the money supply is seen to increase, then soon 
a) both long- and short-term bond prices should rise 
b) both long- and short-term bond prices should fall 
c) long-term bond prices should rise and short-term bond prices should fall 
d) long-term bond prices should fall and short-term bond prices should rise 
4. The real interest rate is the 
a) nominal interest rate less the expected rate of inflation 
b) nominal interest rate plus the expected rate of inflation 
c) observed interest rate less the expected rate of inflation d) both a) and c) above



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