In the early 1980s, U.S. economic policy was directed toward reducing inflation. What would you have expected to observe during this short period of time?
a. Inflation fell and unemployment fell.
b. Inflation and unemployment were both unaffected.
c. Inflation fell and unemployment increased.
d. Inflation fell and unemployment was unchanged.
c
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Return to the case of education and the job market from the previous question. Which condition would be consistent with both types' obtaining an education in equilibrium?
a. cH < w < cL. b. cL < w < cH. c. cH < cL < w. d. w < cL < cH.
When the economy is operating at a point where aggregate demand equals short-run aggregate supply, it must be true that:
A. the short-run level of output is not the same as long-run potential output. B. aggregate demand also equals long-run aggregate supply. C. prices are higher than expected prices. D. None of these must be true.
If a company owns plants at various stages of the production process, this is called:
A. a multiplant firm. B. a conglomerate. C. a vertically integrated firm. D. an industry.
In the first graph below, illustrate the cost curves and demand conditions for a monopolistic ally competitive firm making short-run profits. In the second graph, illustrate what those conditions are most likely to be in the long run. Explain the major
differences in the two graphs. What will be an ideal response?