Explain how the unexpectedly high rate of productivity growth at the end of the 1990s affected inflation and unemployment during this period
What will be an ideal response?
The unexpectedly high rate of growth of productivity would cause firms' costs to drop. This would cause (if unexpected) a reduction in unemployment. So, we would observe a simultaneous drop in u and drop in inflation.
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The economic functions of government differ from the political functions of government in that
A) the economic functions are carried out by the federal government, while the political functions are carried out by state and local governments. B) the economic functions include policies that affect income redistribution, while the political functions involve things that affect the way exchange is carried out. C) the economic functions involve things that affect the way exchange is carried out while the political functions include policies that affect income redistribution. D) the economic functions are carried out by state and local governments, while the political functions are carried out by the federal government.
Which of the following supports the argument for hands-on policy?
A. The failure of discretionary policy. B. The theory of rational expectations. C. Greater stability of the economy in the last 40 years. D. The existence of the four obstacles to policy success.
Suppose China can produce either 600 telephones or 400 DVD players, and Japan can produce either 400 telephones or 200 DVD players. Implicitly, China has
A. Both an absolute and a comparative advantage in DVD players. B. Neither a comparative nor an absolute advantage in DVD players. C. A comparative but not necessarily an absolute advantage in DVD players. D. An absolute but not necessarily a comparative advantage in DVD players.
If output is set at the kink of the kinked-demand model, then there:
A. is a strong incentive for rivals to decrease prices. B. is a strong incentive for rivals to increase prices. C. are several prices at which marginal revenue equals marginal cost. D. is one price at which marginal revenue equals marginal cost.