For this question, assume that the expected rate of inflation is a function of past year's inflation. Also assume that the unemployment rate has greater than the natural rate of unemployment for a number of years. Given this information, we know that
A) the rate of inflation will approximately be equal to zero.
B) the rate of inflation should neither increase nor decrease.
C) the rate of inflation should steadily increase over time.
D) the rate of inflation should steadily decrease.
E) the inflation rate will be approximately equal to the natural rate of unemployment.
D
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The country of Kemper is on its aggregate production function at point W in the above figure. The government of Kemper passes a law that makes 4 years of college mandatory for all citizens. After all citizens have their education, the economy will
A) move to point such as Y. B) remain at point W. C) move to point such as X. D) move to point such as Z.
Assume a change in price causes the price elasticity of demand for a good (in absolute value) and marginal revenue to decrease. In this case we can conclude that the price of the good was:
A) increased. B) held constant. C) decreased. D) cannot be determined.
If expectations are formed rationally and wages are flexible, the aggregate supply curve is
A) upward sloping. B) horizontal. C) vertical. D) relatively flat.
If company Z is receiving a government subsidy, the government is taking money from ____________ and giving it to company Z. If company Z is getting a tax deduction (instead of receiving a subsidy) then company Z is ______________________
A) taxpayers; paying more in taxes than it would without the tax deduction B) taxpayers; subsidizing the taxpayers C) Congress; paying more in taxes than it would without the tax deduction D) taxpayers; paying less in taxes than it would without the tax deduction