If the economy is at point A in the Phillips curve shown, and the government runs expansionary monetary policy, what prediction would you make for inflation?
A. It will increase.
B. It will remain constant.
C. It will explode.
D. It will decrease.
Answer: B
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The number of years required for real GDP to double can be found by
A. multiplying the annual growth rate by 72. B. dividing 72 by the annual growth rate. C. adding 72 to annual growth rate. D. dividing the annual growth rate by .072.
As an individual consumes more of a given good or service, the marginal utility of that good to the consumer likely: a. increases
b. remains constant. c. falls. d. falls and then rises.
An economic model:
A. should include all possible details. B. will never use simplifying assumptions. C. always accurately predict cause and effect. D. should make clear assumptions.
The production possibilities curve illustrates the basic principle that
A. an economy's capacity to produce increases in proportion to its population size. B. if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced. C. an economy will automatically seek that level of output at which all of its resources are employed. D. the production of more of any one good will in time require smaller and smaller sacrifices of other goods.