According to economists who explain the Phillips curve, a decline in the unemployment rate causes higher rates of inflation because
a. workers are concerned about protecting their jobs and so they accept smaller wage increases
b. during periods of GDP growth, firms find it easier to pay higher wage rates and charge higher prices without worrying about losing markets
c. firms decrease production and compete less aggressively for workers during periods of inflation
d. workers feel less secure about their jobs and demand higher pay raises
e. the Laffer curve comes into effect
B
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The graph shown best represents:
A. a binding price ceiling.
B. a binding price floor.
C. a missing market.
D. a market for an inferior good.
Some economists argue that policymakers can use monetary and fiscal policy to reduce the severity of economic fluctuations. What are some things policymakers can do to boost the economy when aggregate demand is inadequate to ensure full employment?
Fill in the blanks. Which of the following has been found by researchers in surveys of consumers? Most people consider it _________ for firms to raise their prices following an increase in costs ____________ to raise prices following an increase in demand.
a. fair; and fair b. fair; but unfair c. unfair; but fair d. unfair; and unfair
An optimum currency area is a geographic region
A. with inflation near zero. B. that allows exchange rates to float. C. for which the benefits of having a common currency exceed the costs. D. that has fixed exchange rates.