Suppose the annual inflation rate in an economy increases from 4 percent to 10 percent. Which of the following will be an appropriate policy measure in this situation?
a. A decrease in the tax rate
b. An increase in government purchases
c. An open market purchase of government bonds
d. An increase in the reserve requirement
d
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The use of sharp, temporary price cuts as a form of _________________ would enable traditional US automakers to discourage new competition from smaller electric car manufacturers.
A. natural monopoly B. monopolistic competition C. predatory pricing D. oligopolistic competition
In the United States and in virtually every other country, the printing of money is
A. limited by the supplies of gold and silver the central bank holds in reserve. B. strictly a government monopoly. C. open to the free market so that different monies can compete for acceptance with one another. D. a privilege that is allowed only to banks that are members of the Federal Reserve System.
Use the following diagram to answer the next question.
Assume the economy is initially at the full employment level of real GDP. An increase in consumption will ________.
A. reduce the full employment level of real GDP B. reduce the unemployment rate C. reduce output in the economy D. reduce the price level
If expected inflation decreases does the short-run Phillips curve shift? If so, what direction does it shift? Does the long-run Phillips curve shift? If so, what direction does it shift?