If employees and employers always accurately predict inflation, what is the shape of the Phillips curve?
a. It is horizontal in the short and long run.
b. It is vertical in the short and long run.
c. It is vertical in the short run and upward sloping in the long run.
d. It is downward sloping in the short run and vertical in the long run.
b
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If each customer is sold a product at a different price, then the firm is practicing
A) perfect price discrimination. B) second-degree price discrimination. C) third-degree price discrimination. D) product differentiation.
The political business cycle refers to
a. the fact that about every four years some politician advocates greater government control of the Fed. b. the potential for a central bank to increase the money supply and therefore real GDP to help the incumbent get re-elected. c. the part of the business cycle caused by the reluctance of politicians to smooth the business cycle. d. changes in output created by the monetary rule the Fed must follow.
Suppose that Jessica has a fixed income of $100 per month, which she spends entirely on movies and paperback books. The price of movies is $5 and the price of paperback books is $10. Which of the following combinations is not on her budget line?
A. 5 paperback books and 10 movies B. 10 paperback books and 0 movies C. 3 paperback books and 14 movies D. 8 paperback books and 5 movies
The cost of holding money is
A. transactions accounts. B. the opportunity cost. C. capital controls. D. the liquidity approach.