Suppose right now the inflation rate is 3 percent and the unemployment rate is 4 percent, but 10 months from now unemployment has dropped to 1 percent. Based on the Phillips curve, what else can you assume about the economy 10 months from now?
a. Inflation will also be 1 percent.
b. Real wages will be 1 percent higher.
c. Inflation will still be very near 3 percent.
d. Inflation will be greater than 3 percent.
d. Inflation will be greater than 3 percent.
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The open economy effect and interest rate effect are two of the reasons why
A) higher price levels increase long-run aggregate supply. B) growth of the labor force does not contribute to economic growth in wealthy countries. C) capital formation does not contribute to economic growth in poor countries. D) the aggregate demand curve slopes downward.
When compared to national defense expenditures, human resources expenditures _____
a. declined substantially during the 1980s b. have remain stable since the 1950s c. are a smaller percentage of GDP d. have increased substantially since the mid 1960s
Cyclical unemployment is a problem because
a. it reflects lost output b. workers are not compensated have no income support at all while they are unemployed c. it will never reach zero d. cyclically-unemployed individuals do not have the skills needed for available jobs e. we do not know how to reduce it
Government action can cause a significant market demand shift.
Answer the following statement true (T) or false (F)