What is the effect of supply-side inflation on the short-run Phillips curve?
What will be an ideal response?
The short-run Phillips curve is drawn on the assumption that fluctuations in the economy’s real growth rate from year to year are caused primarily by variations in the rate at which aggregate demand increases. It therefore embodies the concept of a trade-off between inflation and unemployment. If instead fluctuations in the economy’s real growth rate are caused by variations in aggregate supply, including leftward shifts, then higher rates of inflation will be associated with higher rates of unemployment, and lower rates of inflation will be associated with lower rates of unemployment. In effect, the short-run Phillips curve will assume an upward slope.
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Leo is a welfare recipient who qualifies for two means-tested cash benefit programs. If he does not earn any income, he receives $225 from each program. For each dollar he earns (which his employer is required to report to the welfare agency), his benefit from each program is reduced by 75 cents until the benefit equals zero. Suppose Leo earns $10. He will lose ________ from each benefit, for a total loss of ________.
A. $7.50; $15.00 B. $7.50; $7.50 C. $.75; $1.50 D. $.75; $1.00
Which of the following is NOT directly related to human capital?
A) a summer internship B) an MRI machine C) an understanding of real estate markets D) a college education E) knowledge of computer programing
If the U.S. economy is experiencing falling price levels, the
A. expenditure schedule will shift downward. B. expenditure schedule will shift upward. C. slope of the expenditure schedule increases. D. slope of the expenditure schedule decreases.
A monopoly earns the most profit by charging a price where demand is inelastic
a. True b. False Indicate whether the statement is true or false