Question 36 When unemployment is below its natural rate, the inflation rate will

Question

Question 36

When unemployment is below its natural rate, the inflation rate will eventually

increase.

decrease.

move to its natural rate.

become equal to the natural rate of unemployment.

2 points   

Question 37

A decision by foreign central banks to sell their holdings of U.S. Treasury bonds will

lower bond prices and interest rates in the United States.

increase bond prices and interest rates in the United States.

increase bond prices and lower interest rates in the United States.

lower bond prices and increase interest rates in the United States.

Question 43

Currency traders expect the value of the dollar to rise. What effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market?

Demand for dollars will increase, and supply of dollars will decrease.

Demand for dollars will increase, and supply of dollars will increase.

Demand for dollars will decrease, and supply of dollars will increase.

Demand for dollars will decrease, and supply of dollars will decrease.

increase.

decrease.

move to its natural rate.

become equal to the natural rate of unemployment.

Explanation / Answer

a)When unemployment is below the natural rate it means there is high inflation in the economy.

b)Selling the bonds will lower the prices but increase interest rates in US

C) Demand for dollar increases but the supply falls comparatively .

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