When inflation comes from the supply side, inflation and unemployment are positively correlated. Does this mean that monetary and fiscal policy makers can escape the trade-off between inflation and unemployment?
No. Shifts of the aggregate supply curve can cause inflation and unemployment to rise or fall together, and thus can destroy the statistical Phillips curve relationship. Nevertheless, anything that monetary and fiscal policy can do will make unemployment and inflation move in opposite directions because monetary and fiscal policies influence only the aggregate demand curve, not the aggregate supply curve. Thus, no matter what the source of inflation, and no matter what happens to the Phillips curve, the monetary and fiscal policy authorities still face a disagreeable tradeoff between inflation and unemployment.
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A. externality provision. B. market failure. C. asymmetric information. D. a public goods problem. E. the free-rider dilemma.
When voters pay taxes in proportion to the benefits they receive from government projects
What will be an ideal response?
A health maintenance organization where the physicians are salaried employees of the HMO is called:
a. an IPA. b. a network-model HMO. c. a direct-contract HMO. d. a staff-model HMO. e. a group-model HMO
Which is a correct match of an economic resource and payment for that resource?
a. Labor and interest income b. Capital and profit c. Land and rental income d. Entrepreneurial ability and wages