Refer to Figure 28-3. The shifts shown in the short-run and long-run Phillips curves between period 1 and period 2 could be explained by
A) either an increase in expected inflation from 4.0 to 5.5 percent or an increase in the natural rate of unemployment from 5.5 to 6.8 percent.
B) an increase in the expected inflation rate from 4.0 to 5.5 percent.
C) an increase in the natural rate of unemployment from 5.5 to 6.8 percent.
D) None of the above is correct.
C
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In the model of the money supply process, the bank's role in influencing the money supply process is represented by
A) the excess reserve. B) both the excess reserve and the market interest rate. C) the currency ratio. D) only borrowed reserves.
In equilibrium,
A) income = planned expenditures. B) unplanned inventory investment is zero. C) Ep (planned expenditures) crosses the 45-degree income line. D) all of the above.
Quebec is capable of producing 10 pallets of wood shingles or 8 barrels of maple syrup with a unit of labor. Vermont is capable of producing 12 pallets of wood shingles or 12 barrels of maple syrup with a unit of labor. Assume that this is typical of the labor force as a whole. Which location has the absolute advantage and which has the comparative advantage, in the production of each good? Can these locations reap gains from trade?
What will be an ideal response?
If a monopoly firm sells to competitive distributors and the distributors have a constant marginal cost of $2 and they are paying the profit-maximizing wholesale price of $8, what is the retail price of the product?
A) $6 B) $8 C) $2 D) $10