Assume expectations of prices are correct but expectations of productivity adjust slowly. Use the PS/WS relations, graphically illustrate and explain the effects of a decrease in productivity growth on the natural rate of unemployment
What will be an ideal response?
The PS relation shifts up by a factor A. The WS relation shifts up by a factor Ae. If Ae>A, the PS curve shifts up by less than the WS relation shifts up, leading to an increase in the natural rate of unemployment for some time.
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Indicate whether the statement is true or false
If a British automobile sells for £20,000 and the British pound is worth $1.50, then the dollar price of the automobile is
A) $1.60. B) $12,500. C) $20,000. D) $30,000.
Social Security payments:
A. now hold their value over time. B. are adjusted for inflation using the CPI. C. undergo cost-of-living adjustments. D. All of these statements are true.
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