The long-run Phillips curve is a
A) straight line with a 45 degree slope showing the long-run relationship between the inflation rate and the expected inflation rate.
B) vertical line that shows the relationship between inflation and unemployment when the economy is at full employment.
C) vertical line indicating a positive relationship between inflation and unemployment.
D) horizontal line indicating a positive relationship between inflation and unemployment.
E) horizontal line that shows the relationship between inflation and unemployment when the economy is at full employment.
B
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Why does an increase in the price level tend to cause the consumption function to shift downward?
A. An increase in the price level decreases disposable income. B. An increase in the price level increases the demand for fixed money assets. C. An increase in the price level decreases the value of fixed money assets. D. An increase in the price level decreases saving and increases debt.
The relative quickness with which the Open Market Committee can respond to changes in economic indicators leads the Fed to
A) control precisely the growth rate of the money stock. B) control precisely the growth rate of total spending. C) make more frequent mistakes in monetary policy than Congress makes in executing fiscal policy. D) use the discount rate to control bank lending and hence aggregate demand.
Taco Bell's economists determine that the price elasticity of demand for their tacos is 2.0. So, if Taco Bell raises the price of its tacos by 6.0 percent, the quantity demanded will decrease by ________ percent
A) 2.0 B) 3.0 C) 6.0 D) 12.0
The U.S. federal government obtains most of its revenues through taxes from three sources. Which of the following is not one of those three main sources of federal revenue?
A) corporate income taxes B) social insurance taxes C) sales and excise taxes D) individual income taxes