Refer to Figure 12.1. Suppose the economy is initially at full employment with real GDP equal to potential GDP, and the expected inflation rate equal to the actual inflation rate
If the economy then experiences a negative demand shock, and the Fed responds to the results of the demand shock with an appropriate monetary policy, the Fed response will A) push the economy further down the Phillips curve, lowering the inflation rate further.
B) push the economy back up the Phillips curve, raising the inflation rate towards its full-employment level.
C) push the economy back down the Phillips curve, lowering the inflation rate towards its full-employment level.
D) push the economy further up the Phillips curve, lowering the inflation rate further.
B
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A $2.00 increase in the size of a tax on a good will only cause the price for buyers to increase by $2.00 if
A) demand is perfectly inelastic. B) demand is perfectly elastic. C) demand is unit elastic. D) demand is inelastic, but not perfectly inelastic. E) demand is elastic, but not perfectly elastic.
All else constant, all of the following would cause the demand curve for a good to shift except:
A) a change in the cost of producing the good. B) a change in the price of a related good. C) a change in consumer's incomes. D) a change in the number of buyers.
Suppose that the European Central Bank enacts expansionary policy. Everything else held constant, this will cause the demand for U.S. assets to ________ and the U.S. dollar to ________
A) increase; appreciate B) decrease; appreciate C) increase; depreciate D) decrease; depreciate
A monopolistic competitor's demand curve tends to be more inelastic than a monopolist's demand curve
a. True b. False Indicate whether the statement is true or false