Which statement(s) is (are) consistent with a positive relationship between inflation and the output gap?
A) If output rises above its potential level, the unemployment rate falls and firms will raise wages and prices more rapidly.
B) In the short run, the AS curve is upward sloping.
C) Through Okun's law, the negative relationship between the output and unemployment gaps allows the modern Phillips curve to be translated into the AS curve.
D) all of the above
E) none of the above
D
You might also like to view...
Which of the following statements regarding perfect price discrimination is FALSE?
A) Only part of consumer surplus is captured by the firm as producer surplus. B) For the firm, the market demand curve becomes the firm's marginal revenue curve. C) The monopoly produces the output at which the marginal revenue equals the marginal cost. D) No deadweight loss is created.
Why do economists refer to the pricing strategies of oligopoly firms as a prisoner's dilemma game?
What will be an ideal response?
What is the flypaper theory of tax incidence? This theory is typically wrong. Why?
If there is a political business cycle and the Federal Reserve supports the incumbent, then we should expect that prior to elections
a. interest rates and output would rise. b. interest rates would rise and output would fall. c. interest rates would fall and output would rise. d. interest rates and output would fall.