Question
A) Suppose the full-employment level of real GDP is increasing at a rate of 3% per period and the money supply is growing at a
A) Suppose the full-employment level of real GDP is increasing at a rate of
3% per period and the money supply is growing at a 4% rate. What will happen to the long-run inflation rate, assuming constant velocity?
B) Suppose that declining resource supplies reduce potential output in each period by 4%. What kind of monetary policy would be needed to maintain a zero rate of inflation at full employment?
C) The American Economic Association publishes a newsletter (which is available on the AEA's Internet site at http://www.aeaweb.org/joe/) called Job Openings for Economists (]OE). Virtually all academic and many nonacademic positions for which applicants are being sought for economics positions are listed in the newsletter, which is quite inexpensive. How do you think that the publication of this journal affects the unemployment rate among economists? What type of unemployment does it affect?
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