Does the short-run Phillips curve have a positive or negative slope? Explain how this slope is derived
What will be an ideal response?
The short-run Phillips curve has a negative slope, indicating that there is a trade-off between inflation and unemployment. When aggregate demand rises, inflation and real GDP both rise in the short run. As real GDP rises above potential GDP, unemployment begins to fall below its natural rate. The result is higher inflation and a lower rate of unemployment.
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Under a fixed exchange rate system, if an appreciation in the value of a country's currency develops, the monetary authorities must intervene by ________
A) selling foreign exchange B) buying and selling the domestic currency C) raising the foreign interest rate D) buying foreign exchange
When the price of corn falls relative to the price of wheat, the market supply of wheat (which can be grown on the same land) is likely to increase
a. True b. False Indicate whether the statement is true or false
Other things being equal, if a firm's marginal cost curve shifts upward at all output levels:
A. the average total cost curve remains unchanged at all output levels. B. the average variable cost curve remains unchanged at all output levels. C. the average fixed cost curve remains unchanged at all output levels. D. All of these
Value added can be determined by:
A. summing the profits of all enterprises in the economy. B. subtracting the purchase of intermediate products from the value of the sales of final products. C. calculating the year-to-year changes in real GDP. D. deflating nominal GDP.