Inflation only results in reduced unemployment when the expected inflation rate and actual inflation rate are the same.
Answer the following statement(s) true (T) or false (F)
Answer: False
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All else held constant, if the price of a resource used to produce product X falls, the
A. demand curve of X will shift to the right. B. supply curve of X will shift to the left. C. supply curve of X will not shift. D. supply curve of X will shift to the right.
Suppose inflation is a threat because the current aggregate demand curve will increase by $600 billion at any price level. If the marginal propensity to consume is 0.75, federal policymakers can follow Keynesian economics and restrain inflation by:
a. decreasing tax revenues by $600 billion. b. decreasing government spending by $200 billion. c. increasing tax revenues by $200 billion. d. increasing government purchases by $150 billion.
Figure 10-2
Figure 10-2 shows demand and short-run cost curves for a perfectly competitive firm. At its profit-maximizing level of output, the firm's short-run TC is represented by area
a.
ADFO.
b.
BGHC.
c.
BGIO.
d.
ADGIO.
If the demand curve is horizontal and the supply curve is vertical, shifts of the supply curve will lead to
A) changes in the equilibrium quantity only. B) changes in the equilibrium price only. C) changes in both the equilibrium price and quantity. D) changes in the quantity demanded only.