If employees and employers always accurately predict inflation, what is the shape of the Phillips curve?
A. The Phillips curve is horizontal in the short and long run.
B. The Phillips curve is vertical in the short and long run.
C. The Phillips curve is vertical in the short run and upward sloping in the long run.
D. The Phillips curve is downward sloping in the short run and vertical in the long run.
Answer: B
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A consumer is a borrower if
A) optimum current consumption is less than current disposable income. B) optimum current consumption is greater than current disposable income. C) future disposable income is greater than current disposable income. D) the consumer's indifference curves are relatively steep.
A monopolistically competitive firm maximizes profits when it
A) produces the quantity at which marginal cost equals the market price. B) produces the quantity at which marginal cost equals marginal revenue and uses the demand curve to determine the market price. C) produces the quantity at which marginal cost equals marginal revenue and sets the price equal to the marginal cost. D) produces the quantity at which marginal cost equals marginal revenue and sets the price equal to the marginal revenue.
If AD and AS increase at exactly the same rate, the result will be
A. demand-side inflation. B. supply-side inflation. C. falling prices. D. stable prices.
Explain the basic operations of an economic game
What will be an ideal response?