If the short-run Phillips curve has a very steep slope, the
A. structural deficit will grow during inflation.
B. structural deficit will fall during recession.
C. inflation costs of reducing unemployment are relatively low.
D. inflation costs of reducing unemployment are relatively high.
Answer: D
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You are considering the purchase of a business that is currently earning $25,000 per year in after-tax profit. If these conditions are expected to continue year after year into the future, and the interest rate is currently 10 percent, the current market value of this business is
a. $2,500. b. $25,000. c. $250,000. d. $2,500,000.
Other things constant, if Americans suddenly decreased their desire for Mexican tequila, the exchange rate value of the Mexican peso would
a. increase, which is an appreciation of the Mexican peso. b. increase, which is a depreciation of the Mexican peso. c. decrease, which is an appreciation of the Mexican peso. d. decrease, which is a depreciation of the Mexican peso.
A perfectly competitive firm is so small relative to the size of the market that the firm's decision about how much to produce:
a. has a significant effect on market price. b. has a significant effect on market supply. c. has no effect on market price. d. has no effect on the market demand.
Which of the following does not directly affect the optimal stock of capital?
a) the price of output b) the marginal product of labor c) the depreciation rate d) the risk premium e) taxes