The relationship between inflation and unemployment is given by ? = ?e - 2(u - 
).(a)Draw a diagram showing a long-run Phillips curve and two short-run Phillips curves that contain the following points: A: ? = .03, ?e = .03 B: ? = .06, ?e = .06 C: ? = .03, ?e = .06 D: ? = .06, ?e = .03Label points A, B, C, and D in your diagram.The unemployment rate at point A equals .05.(b)What are the values of the natural rate of unemployment and the unemployment rates at points B, C, and D?
What will be an ideal response?
| (a) | Long run: vertical line at u =  = 0.05. |
| (b) |  = 0.05.; B: u = .05; C: u = .065; D: u = .035 |
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An increase in the demand for labor means that
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Roughly what percent of American families lived below the poverty line in 2010?
A) 12% B) 22% C) 32% D) 42% E) 52%
Other things the same, if a country raises its saving rate, when is growth of real GDP per person higher?
a. as the economy moves toward the long run and in the long run. b. as the economy moves toward the long run, but not in the long run. c. in the long run, but not as the economy moves toward the long run. d. neither as the economy moves toward the long run, nor in the long run.
The total amount of consumer surplus and producer surplus is at its maximum when
A) consumers and producers are allowed to trade at the market clearing price. B) the government imposes a price floor that is higher than the market clearing price. C) the government imposes a price ceiling that is lower than the market clearing price. D) free market exchanges do not exist.