If the Federal Reserve accommodates an adverse supply shock,
a. inflation expectations may rise which shifts the short-run Phillips curve shifts right.
b. inflation expectations may rise which shifts the short-run Phillips curve shifts left.
c. inflation expectations may fall which shifts the short-run Phillips curve shifts right.
d. inflation expectations may fall which shifts the short-run Phillips curve shifts left
a
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If aggregate spending in an economy can be written as Y = 15,000 + 0.6Y - 20,000r, and potential output equals 36,000, what real interest rate must the Federal Reserve set to bring the economy to full employment?
A. 4 percent B. 5 percent C. 2 percent D. 3 percent
Which of the following is true concerning cost curves?
a. TC + TFC = TVC b. AFC + AVC = ATC c. MC + AVC = TVC d. TC – MC = TFC e. ATC + MC = TC
The expansionary effects of an increase in government expenditures will tend to be offset, at least partially, if
a. government borrowing drives interest rates upward. b. taxes are not also increased. c. business decision makers and consumers become more optimistic as the result of the fiscal stimulus. d. the economy is operating well below its full-employment capacity.
Test pilots are paid high wages by airplane makers primarily because
a. the demand for labor in this area is very high relative to the demand for labor in other areas of employment. b. the demand for labor in this area is very low relative to the demand for labor in other areas of employment. c. the demand for labor in this category is highly elastic. d. few people possess the required skills and the occupation is very risky.