According to the Friedman-Phelps analysis, in the long run actual inflation equals expected inflation and unemployment is at its natural rate
a. True
b. False
Indicate whether the statement is true or false
True
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Nick considers macaroni and cheese to be an inferior good. As a result of macaroni and cheese being an inferior good, the
A) substitution effect must be larger in magnitude than the income effect so that less is purchased as the price falls. B) substitution effect must be smaller in magnitude than the income effect so that less is purchased as the price falls. C) income effect is positive, so that more is purchased as income increases. D) income effect is negative, so that less is purchased as income increases.
Firms are ________ with an economic profit of zero, they will ________ in the industry since they ________ be better off in another industry
A) satisfied, stay, won't B) unsatisfied, leave, will C) satisfied, leave, will D) unsatisfied, stay, won't
A country with an overvalued currency
a. will have a balance of payments deficit. b. will suffer losses of foreign reserves. c. must intervene in the foreign exchange market to buy its own currency. d. All of the above are correct.
The Scarcity Principle applies to:
A. firms primarily. B. everyone. C. poor people primarily. D. consumers primarily.