An unanticipated shift to a more expansionary monetary policy that permanently increases the rate of inflation from 2 to 6 percent will
a. reduce unemployment in the short run, but unemployment will return to the natural rate in the long run.
b. reduce unemployment in the short run, but unemployment will exceed the natural rate in the long run.
c. increase unemployment in the short run, but unemployment will return to the natural rate in the long run.
d. exert an unpredictable impact on unemployment in the short run, but unemployment will return to the natural rate in the long run.
A
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
A competitive strategy is
A) is the development of a price fixing arrangement. B) the development of a distinctive capability. C) a rent-seeking strategy. D) a path to accounting profits.
The price elasticity of demand for a commodity is determined primarily by the
a. size of the consumer surplus. b. availability of good substitutes for the good. c. incomes of consumers. d. availability of complementary goods.
Suppose the nation of Arcadia produces only two goods, teapots and surfboards. If Arcadia produces only teapots, it can make 40 per day. If Arcadia produces only surfboards, it can make 60 per day. What is the opportunity cost of 1 teapot in Arcadia?
A. 2/3 of a surfboard B. 1.5 surfboards C. 40 surfboards D. 60 surfboards