Briefly describe the Phillips curves and its associated trade-offs.
What will be an ideal response?
Student responses will vary but should accurately describe the relationship and tradeoff between inflation and unemployment. The Phillips curve demonstrates that at higher rates of inflation, the rate of unemployment is lower, while during periods of relatively stable or falling prices, unemployment is substantial. In short, the cost of lower unemployment appears to be greater inflation, and the cost of greater price stability appears to be higher unemployment.
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Refer to the below graph of the market for low-skilled labor. Sd is the supply of domestic resident workers, and St is the total supply of labor including undocumented workers. If there are illegal immigrants in the market, how many legal residents will be employed?
A. 15M
B. 120M
C. 135M
D. 22M
The rising portion of a perfectly competitive firm's marginal cost curve, above the intersection with AVC, is its
A) demand curve. B) economic profit. C) supply curve. D) accounting profit.
Under current WTO rules, a country can adopt:
A. any environmental standard it chooses, even if it discriminates against foreign producers. B. any environmental standard it chooses as long as it does not discriminate against foreign producers. C. only WTO-approved environmental standards. D. only the same environmental standards as its immediate geographic neighbors.
With the Lucas supply function, a price surprise means
A. actual price is greater than expected price. B. actual price is less than expected price. C. actual price is either greater than or lower than expected price. D. actual price equals expected price.