When the expected inflation rate changes, what happens to the short-run Phillips curve? To the long-run Phillips curve?
What will be an ideal response?
When the expected inflation rate changes, the short-run Phillips curve shifts but the long-run Phillips curve does not shift. In particular, if the expected inflation rate increases, the short-run Phillips curve shifts upward and if the expected inflation rate decreases, the short-run Phillips curve shifts downward.
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By analyzing aggregate demand through its component parts, we can conclude that, everything else held constant, a decline in the inflation rate causes
A) an increase in real interest rates, an increase in investment spending, and a decline in aggregate output demand. B) a decline in real interest rates, a decrease in investment spending, and an increase in aggregate output demand. C) a decline in real interest rates, an increase in investment spending, and an increase in aggregate output demand. D) an increase in real interest rates, a decline in investment spending, and a decline in aggregate output demand.
The Dred Scott v. Sanford decision of the U.S. Supreme Court in 1857
(a) made all persons born in the U.S. citizens. (b) provided U.S. citizenry to the children of U.S. born slaves. (c) permitted slaves to sue others in courts. (d) prevented slaves from being taken away from their owners without due process.
The two loops in the circular-flow diagram represent
a. the flow of goods and the flow of services. b. the flow of dollars and the flow of financial assets. c. the flow of inputs into production processes and the flow of outputs from production processes. d. the flows of inputs and outputs and the flow of dollars.
Which of the following examples would most likely happen when interest rates are low?
a. Lily invests $20,000 in municipal bonds. b. Millie keeps a larger balance in her no-interest checking account. c. Finlay decides it is a bad time to purchase a car. d. Logan increases his deposits in an interest-earning savings account.