Unemployment and Inflation Are Important Determinants of Short-Run Material Welfare

question 69

True/False

Unemployment and inflation are important determinants of short-run material welfare, whereas productivity growth is an important determinant of long-run material well-being.

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Definitions:

Reserve Requirement Ratio

The fraction of deposits that banks must hold in reserve and not lend out, as mandated by the central bank.

Checkable Deposits

Bank account balances that can be withdrawn on demand using checks or electronic payment methods without any advance notice.

Excess Reserves

The amount of reserves that a bank holds in excess of the reserve requirements set by a central bank.

Money Expansion

refers to an increase in the money supply, which can result from actions by the central bank or financial institutions that impact lending and liquidity.