The Friedman-Phelps analysis shows that a negative relationship between inflation and unemployment holds
A. even when the natural rate of unemployment changes.
B. even when expected inflation changes.
C. as long as the expected inflation rate and the natural rate of unemployment are approximately constant.
D. even if both the expected inflation rate and the natural rate of unemployment change.
Answer: C
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Suppose that initially the price of a bag of jellybeans is $6, and the price of a bottle of cola is $2. If the price of a bottle of cola increases, then the relative price of jellybeans
A) increases. B) decreases. C) stays the same, but the relative price of cola increases. D) stays the same, but the relative price of cola decreases.
An economy that engages in international trade is called
A) a cooperative economy. B) a modern economy. C) an engaged economy. D) an open economy.
A purchase of U.S. government securities by the Fed causes
A) an expansion of the money supply equal to the amount of the securities purchased. B) a contraction of the money supply equal to the amount of the securities purchased. C) an expansion of the money supply of more than the amount of the securities purchased. D) a contraction of the money supply of more than the amount of the securities purchased.
If the dollar appreciates relative to other currencies, which of the following is true?
a. It takes more foreign currency to buy a dollar. b. It takes more dollars to buy a foreign currency. c. U.S. exports will increase. d. Foreign purchases of U.S. goods will increase.