Some economists argue that the short-run Phillips curve is not vertical, and that monetary policy can be effective in the short run. Which one of the following is not one of the reasons for this skepticism?
A) Individuals may not be able to use information of Fed Policy to make a reliable forecast of inflation.
B) Empirical evidence shows workers and firms have rational expectations.
C) Contracts with workers and suppliers may hinder firms' abilities to adjust to price changes.
D) Wages and prices may not adjust rapidly enough to keep the short-run Phillips curve vertical.
B
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The phrase "decreasing marginal benefit" means that
A) the more you consume of the product, the less total benefit you derive. B) the marginal cost will be increasing as you consume more of a good. C) each additional unit of a good you consume gives you less additional benefit than the previous unit. D) Both answers A and B are correct. E) Both answers A and C are correct.
Which of the following strategies are adopted by a business tycoon when the first new management of the purchased company fails?
a. He tries a second management team. b. He tries to train and motivate the existing management team. c. He sells off part of the company in the market. d. He tries to reduce the cost of production by lowering output.
To measure an economy's output adjusted for changes in the price level, one would use
A. Nominal GDP. B. GDP per capita. C. Real GDP. D. Value added.
The economy pictured in the figure below has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; B B. recessionary; C C. recessionary; A D. expansionary; A