How does the expected inflation rate affect the short-run Phillips curve tradeoff between inflation and unemployment?
What will be an ideal response?
The expected inflation rate affects the short-run Phillips curve. If the expected inflation rate increases, then the short-run Phillips curve shifts upward, which means there is a worse tradeoff between inflation and unemployment. If, however, the expected inflation rate decreases, the short-run Phillips curve shifts downward, thereby improving the tradeoff between inflation and unemployment.
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When inflation occurs
A. each dollar of income will buy more output than before. B. the purchasing power of money decreases. C. the purchasing power of money increases. D. all prices are rising.
Describe the costs of deforestation
What will be an ideal response?
Suppose you borrow $2,000 for one year and at the end of the year you repay the $2,000 plus $110 of interest. If the expected inflation rate was 2.2% at the time you took out the loan, what was the real interest rate you paid?
A) 2.2% B) 3.3% C) 5.5% D) 7.7%
Which of the following factors will reduce considerably the ability of a union to raise the wages of its workers?
a. an elastic demand for the goods produced by union labor b. weak foreign competition for the product union labor helps to produce c. high tariffs on goods produced by the union labor d. favoritism in the allocation of government contracts to firms that employ union labor