What action should the Fed take if it wants to move from a point on the short-run Phillips curve representing low unemployment and high inflation to a point representing higher unemployment and lower inflation?
What will be an ideal response?
The Fed would undertake a contractionary monetary policy. This would decrease aggregate demand, causing real GDP and the price level to both decrease. A decrease in real GDP will decrease employment, raising the unemployment rate.
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The elimination of barriers to the international flow of labor tends to:
A. Lower the wage rates for all labor B. Raise the wage rates for all labor C. Increase worldwide production efficiency D. Decrease worldwide production efficiency
What are the factors that change saving and shift the supply of loanable funds curve?
What will be an ideal response?
Today's exchange rate system can be described as
a. a fixed exchange rate system b. a freely floating exchange rate system c. a pegged exchange rate system d. a flexible exchange rate system e. a managed float
The IMF offers loans to developing countries in times of balance of payment constraints, but the IMF also faces strong criticisms because:
A. contractionary fiscal policy and expansionary monetary policy tend to be ineffective against balance of payment constraints. B. contractionary fiscal and monetary policies are always undesirable for any developing country. C. it employs economists that know little about developing countries and their economic affairs. D. the conditions tend to be procyclical, therefore worsening the recessions.