Question

True or false questions:

1. The horizontal intercept of the Okun’s Law curve for an economy is

that economy’s NAIRU.


2.Liquidity traps can be caused by large negative shocks to the level of

aggregate demand such as is currently occurring in response to

Covid19 virus. __________



3.The concept of “factor price equalization” is directly related to the

“interest rate parity condition” as used in the Mundell-Fleming open

economy macro model.


4. According to the Mundell-Fleming variant of the IS-LM macro model

the effect of an expansionary fiscal policy on the level of fixed

investment is uncertain.

Answer 1

1.false

2.true

3.true

4.false