According to the natural rate hypothesis, if the economy begins at full employment with an unemployment rate of 5 percent and then the inflation rate increases from 2 percent to 4 percent, then the economy will
A) not see any lower unemployment, even temporarily, just higher inflation.
B) have lower unemployment but then return to its natural rate with an inflation rate of 4 percent.
C) eventually return to its natural rate of 2 percent inflation and its natural unemployment rate of 5 percent.
D) eventually return to its natural rate of 2 percent inflation and a new lower unemployment rate.
E) stay at the 4 percent inflation rate and the natural unemployment rate will fall.
B
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Consider a game in which all outcomes give the players the same total payoff. Explain why every outcome in such a game will be Pareto optimal.
What will be an ideal response?
As the U.S. price level decreases, expenditures by which of the following will remain unaffected?
A. Consumers B. Businesses C. The rest of the world D. Government
Refer to the graph shown. The equilibrium price for the monopolistically competitive firm represented is:
A. $6. B. $4. C. $10. D. $7.
The long-run equilibrium for a firm in an information product industry exists at a point at which
A. marginal cost exceeds marginal revenue. B. average total cost is minimized. C. the demand curve is tangent to the average total cost curve. D. the demand curve crosses the marginal cost curve.