Suppose the Fed Increased the Growth Rate of the Money

question 38

Multiple Choice

Suppose the Fed increased the growth rate of the money supply.Which of the following would be higher in the long run?

• A)both the natural rate of unemployment and the inflation rate
• B)the natural rate of unemployment,but not the inflation rate
• C)the inflation rate,but not the natural rate of unemployment
• D)neither the natural unemployment rate nor the inflation rate

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Definitions:

Rational Choice Theory

A framework for understanding and often formally modeling social and economic behavior based on the assumption that individuals act on rational self-interest.

Network Theory

A theory in sociology and other fields that examines how networks of social interactions influence behavior and outcomes.

Rational Choice Theory

A theory in social science that posits individuals always make prudent and logical decisions that provide them with the highest amount of personal utility.

Corporate Actors

Entities such as companies or businesses that are capable of making decisions and acting in the economic or social sphere, often with considerable influence.