Assume that expected inflation is based on the following: ?et = ??t-1. An increase in ? will cause
A) an increase in the natural rate of unemployment.
B) a reduction in the natural rate of unemployment.
C) no change in the natural rate of unemployment.
D) inflation in period t to be more responsive to changes in unemployment in period t.
C
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The difference between the pretax and posttax return to an economic activity is known as the
A) tax multiplier. B) net tax. C) tax burden. D) tax wedge.
For a commitment strategy to work:
A. the punishment must be so bad that it outweighs the incentive to defect in the game. B. the punishment must occur immediately after the game is played. C. both players must agree to a punishment. D. no player may have a dominant strategy.
Requiring a firm with international operations to follow the standards of its home country instead of those of the foreign country has all of the following advantages EXCEPT
A) it takes care of the fear of a race-to-the-bottom by making it impossible for a home-based company to exploit low standards.
B) it shifts the costs of improved standards to firms and consumers in high-income countries.
C) it removes the threat of domestic firms relocating abroad for low standards and ensures that any relocation that takes place is due to foreign comparative advantage.
D) it avoids the problems of high-income countries dictating what standards are to be used. In this situation, firms that cross national boundaries must conform to whichever standards are higher.
E) it is a comprehensive measure, since it addresses the problem of production in foreign firms as well as firms from high-standards countries that relocate abroad.
How do income and wealth change over a person's lifetime? How does this affect the distribution of income at a point in time?
What will be an ideal response?