Refer to Figure 17-3. The shifts shown in the short-run and long-run Phillips curves between period 1 and period 2 could be explained by
A) 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) 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.
D) None of the above is correct.
A
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The long-run average cost curve
A) is the sum of a firm's short-run average cost curves. B) shows the lowest average cost facing a firm as it increases output changing both its plant and labor force. C) initially rises when output increases and then falls when output increases. D) always falls as output increases. E) always rises as output increases.
Suppose that the demand curve for apples is downward sloping and the price per bushel increases from $6.50 to $7.50. We would then expect
A) the demand for apples to decrease. B) the quantity of apples demanded to fall. C) the demand curve to shift toward the origin. D) the quantity of apples demanded to increase.
Supply curves applicable to shorter periods of time tend to:
a. be represented by horizontal lines parallel to the quantity axis. b. be perfectly elastic. c. be more inelastic than supply curves that apply to longer periods of time. d. be more elastic than supply curves that apply to longer periods of time. e. have a price elasticity of supply that is approximately equal to 1.
The Arrow impossibility theorem shows that
a. democracy should be abandoned as a form of government. b. it is impossible to improve upon democratic voting methods as a mechanism for social choice. c. all voting systems are flawed as a mechanism for social choice. d. the median voter's preferences will always win in a two-way vote.