Based on your understanding of the Phillips curve, is it possible for the unemployment rate to increase while inflation increases? Explain
What will be an ideal response?
This can occur when negative supply shocks occur. That is, we would observe this when factors cause the natural rate of unemployment to rise (e.g. during the 1970s). This would cause an increase in u and an increase in inflation.
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If demand is elastic, an increase in price will decrease total revenue.
Answer the following statement true (T) or false (F)
The used car market without warranties suffers from
A) perfect competition. B) oligopoly. C) adverse selection and moral hazard. D) excessive signaling.
If the U.S. inflation rate falls relative to the Mexican inflation rate, which of the following will happen in the market for pesos?
a. A rightward shift of the demand curve, a leftward shift of the supply curve, and an appreciation of the peso b. A leftward shift of the demand curve, a rightward shift of the supply curve, and an appreciation of the peso c. A leftward shift of the demand curve, a leftward shift of the supply curve, and a depreciation of the peso d. A rightward shift of the demand curve, a rightward shift of the supply curve, and an appreciation of the peso e. A leftward shift of the demand curve, a rightward shift of the supply curve, and a depreciation of the peso.
The substitution by consumers of one good for another because of relative price changes is:
A. captured by the CPI and causes the CPI to underestimate the cost-of-living changes. B. captured by the CPI and causes the CPI to overestimate the cost-of-living changes. C. not captured by the CPI and causes the CPI to underestimate the cost-of-living changes. D. not captured by the CPI and causes the CPI to overestimate the cost-of-living changes.