Distinguish between the short-run and long-run Phillips curves
What will be an ideal response?
The long-run Phillips curve shows the relationship between inflation and unemployment when the unemployment rate equals the natural rate and the inflation rate equals the expected inflation rate. There is no long-run tradeoff between inflation and unemployment. The short-run Phillips curve, however, shows the relationship between the inflation rate and the unemployment rate when the natural unemployment rate and the expected inflation rate do not change. The short-run Phillips curve is downward sloping, so that it shows a tradeoff between inflation and unemployment.
You might also like to view...
Typically, a bank's largest asset is its
A) holdings of securities. B) loans. C) reserves. D) deposits of its customers.
In a business cycle, a period from peak to trough may be referred to as ________
A) an expansion B) a recurrence C) a contraction D) all of the above E) none of the above
If firms are producing at a profit-maximizing level of output where the price exceeds the average total cost:
A. accounting profits must be negative. B. economic profits must be zero. C. other firms will enter the market. D. firms will exit the market.
The marginal product of a variable input is
A. the second derivative of the total product function. B. zero at the point of diminishing returns. C. the change in the total product that occurs in response to a unit change in the variable input. D. the change in the average product that occurs when the variable input is increased one unit.