The downward slope of the Phillips curve suggests that
A. policy makers face a trade-off between inflation and unemployment.
B. a decrease in the money supply will stimulate aggregate demand.
C. an increase in the price level will depress nominal wages.
D. an increase in the price level will increase the money supply.
Answer: A
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In most cases, optimization in differences is faster and easier than optimization in levels because:
A) the former involves fewer steps to arrive at a conclusion. B) the former only focuses on the key differences between options and ignores things in common. C) the former focuses only on the benefits of an option, ignoring all calculations involving costs. D) the former uses simpler arithmetic tools in comparison to the latter.
What is meant by comparative statics? Explain with an example
What will be an ideal response?
If future changes in stock prices are unpredictable, then we say that the stock prices follow a
A) random walk. B) straight and narrow path. C) meandering path. D) generalized walk.
In 1976, the cost of a movie was $4. In 2012, it's $9. If the CPI for 1976 is 56, and 228 for 2012, to find the real 2012 value of a 1976 movie, we would multiply its nominal value in 1976 by the ratio of:
A. (56/228). B. (228/56). C. (9/5). D. (5/9).