A central bank pledges to reduce the inflation rate from 10% to 3%. People reduce their inflation expectations to 5%, but the central bank reduces inflation to 3%. What happens to the unemployment rate?
It rises.
You might also like to view...
Answer the next question on the basis of the following production possibilities tables for two countries.Latalia's Production Possibilities ABCDEPork (tons)43210Beans (tons)05101520Trombonia's Production Possibilities ABCDEPork (tons)86420Beans (tons)06121824Which of the following would be feasible terms for trade between Latalia and Trombonia?
A. 2 tons of beans for 1 ton of pork B. 1 ton of beans for 1 ton of pork C. 6 tons of beans for 1 ton of pork D. 4 tons of beans for 1 ton of pork
Refer to Figure 13-3. Suppose the economy is at point A. If government spending increases in the economy, where will the eventual long-run equilibrium be?
A) A B) B C) C D) D
Gross investment is equal to ________
A) net investment plus depreciation B) net investment divided by depreciation C) net investment minus depreciation D) net investment times depreciation
Most of the Superfund has been spent on
a. education of the public on environmental issues b. research c. court costs and legal fees d. cleanup and rehabilitation of polluted areas e. development and installation of antipollution devices