On the short-run Phillips curve, the expectations of inflation:
A. remain constant.
B. are rising or falling depending on how the economy is performing.
C. are falling.
D. are rising.
Answer: A
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Consider the utility function 
. If 
, the elasticity of substitution is equal to 1.
The elasticity of substitution for CES utility functions is 
.
Answer the following statement true (T) or false (F)
The era of Prohibition began in 1920 when the Volstead Act was passed to implement the Eighteenth Amendment to the Constitution, which prohibited the production and sale of liquor and beer. In 1920 much of this activity went underground, and Al Capone became a leading illegal entrepreneur. Assuming the amount of liquor and beer produced stayed the same, what was the effect of the Volstead Act on
the GDP in 1920? a. GDP would have declined, since activities in the underground economy are not included. b. GDP would have remained the same, since only the organization producing the goods changed. c. GDP would have increased, because production in the underground economy increased. d. Real GDP would have increased, while nominal GDP would have decreased.
In the short run, which one of the following causes a competitive firm to hire more labor?
A) an increase in wage rate B) an increase in the output price C) a specific tax imposed on the firm's output D) a decrease in the output price
If the domestic price is above the world price of a certain product, the domestic country will import the product.
Answer the following statement true (T) or false (F)