1) Suppose you knew that the NAIRU (the nonaccelerating inflation rate of unemployment) was 7 percent. The current unemployment rate is 6 percent.

a) An increase in government spending is more likely to increase

• prices, not output.
• neither prices, nor output.
• prices and output.
• output, not prices.

b) Now the unemployment rate rises to 8 percent, but the NAIRU stays the same. In this case, an increase in government spending is more likely to increase

• prices and output.
• prices, not output.
• output, not prices.
• neither prices, nor output.

2)State whether each condition is consistent with either a medium of exchange, a store of value, or a standard of value.

a)  You put part of your paycheck into a 401(k) retirement plan.

• Store of value
• Standard of value
• Medium of exchange

b)  You purchase an Amazon Echo.

Medium of exchange

• Store of value
• Standard of value

c)  You notice that the price of a cafe latte, which you drink each morning on the way to work, increases by 50 cents.

• Medium of exchange
• Standard of value
• Store of value

d)  You receive payment for doing your neighbor's taxes.

• Store of value
• Standard of value
• Medium of exchange