Economists Milton Friedman and E.S. Phelps suggested that the apparent trade-off suggested by the Phillips curve could not be exploited by policy makers, because
A) economic participants routinely incorporate changes in the inflation rate into their expectations.
B) economic participants are not rational, and therefore act unpredictably to any policy change.
C) unemployment levels and the inflation rate have a clear, positive relationship.
D) unemployment levels and the inflation rate have a negative (inverse) relationship.
A
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Firms price discriminate to maximize total revenue
Indicate whether the statement is true or false
According to classical economists, in the quantity theory of money,
a. the price level is strictly a function of the supply of money b. the supply of money is strictly a function of the price level c. if output is constant, an increase in the quantity of money will cause the price level to fall d. the money supply and the price level are inversely related e. the money supply is controlled by the government which is why we have had moderate (and sometimes more than moderate) inflation
Suppose the interest rate is 7 percent. Consider four payment options: Option A: $500 today. Option B: $550 one year from today. Option C: $575 two years from today. Option D: $600 three years from today. Which of the payments has the lowest present value today?
a. Option A b. Option B c. Option C d. Option D
A fall in prices of imported resources will cause aggregate:
a. Demand to increase b. Demand to decrease c. Supply to decrease d. Supply to increase