Of the Following Polices, When Would the Unemployment Rate Increase

question 150

Multiple Choice

Of the following polices, when would the unemployment rate increase the most?

• A) a surprise increase in inflation by the Fed
• B) a surprise decrease in inflation by the Fed
• C) an expected increase in inflation by the Fed
• D) an expected decrease in inflation by the Fed
• E) Both answers B and C are correct.

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Definitions:

Federal Funds

Overnight loans made between banks to meet reserve requirements, at an interest rate set by the Federal Reserve.

Political Speech

Expressions related to the government, politics, or public affairs, highly protected under the freedom of speech in many democratic societies.

First Amendment

an amendment to the U.S. Constitution that protects freedoms of speech, religion, press, assembly, and the right to petition the government.

Police Power

The inherent authority of a government to impose regulations to ensure the safety, health, welfare, and morals of the community.