Suppose the Public Expects a 7 Percent Inflation Rate, and Both

question 60

Multiple Choice

Suppose the public expects a 7 percent inflation rate, and both the money supply and money demand grow at 7 percent a year. The Federal Reserve decides to keep the the money growth rate to be 7 percent. In the short run, we expect that investment spending by firms will ________ and consumer durable spending will ________.

• A) increase; decrease
• B) decrease; increase
• C) increase; increase
• D) None of the above; there will be no change in the level of investment spending by firms and consumer durable spending by households.

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Definitions:

Internet Job Board

An online platform where employers post job openings and potential employees can find and apply for positions of interest.

Interviewing

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Professional Brand

The image or perception of a person or organization as projected to and perceived by others, particularly in a professional context.

Passive Applicant

A job seeker who is not actively looking for a new job but may be interested in opportunities that arise.