When the Fed Increases the Rate of Growth of the Money

question 77

Multiple Choice

When the Fed increases the rate of growth of the money supply to jump start the economy, the unemployment type that will be directly affected is the

• A) cyclical unemployment.
• B) structural unemployment.
• C) frictional unemployment.
• D) natural rate of unemployment.

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Definitions:

Production Possibilities Frontier

A graph that represents all the highest production potentials for two products, based on a group of inputs that include resources and various factors.

Marginal Rate Of Transformation

The rate at which one good must be sacrificed to produce an additional unit of another good, based on the given technology and resource constraints.

Marginal Rate Of Transformation

The rate at which one good must be sacrificed to produce an additional unit of another good, reflecting the opportunity cost.

Comparative Advantage

A principle that holds that each party should produce the goods or services for which it has the lowest opportunity cost relative to others.