Explain how a reduction in the proportion of contracts that are indexed affects the relationship between changes in the unemployment rate and inflation
What will be an ideal response?
As the proportion of labor contracts that are indexed falls, the effects of changes in unemployment on inflation would fall. A reduction in u will cause an increase in inflation. When inflation rises in a period, some contracts (those that are indexed) will call for an immediate increase in wages further increasing inflation within that period. As indexation becomes less prevalent, that secondary effect (caused by the indexed contracts) on inflation will be reduced.
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In a perfectly competitive industry, in the long-run equilibrium
A) the typical firm is producing at the output where its long-run average total cost is not minimized. B) the typical firm is earning an accounting profit greater than its implicit costs. C) the typical firm is maximizing its revenue. D) the typical firm earns zero profit.
Public schools are often homogenous because of neighborhood attendance boundaries
a. True b. False
United States coins and currency are backed by
A) silver. B) gold. C) reserves of foreign currencies. D) confidence that they will retain their value.
The two groups that benefit the most from quotas are
A. the importers who have the right to import the restricted good and the domestic producers of the restricted good. B. the domestic consumers of the restricted good and the domestic producers of the restricted good. C. the importers who have the right to import the restricted good and the domestic consumers of the restricted good. D. the domestic consumers of the restricted good and the foreign producers of the restricted good.