On the modern Phillips curve, the initial impact of an increase in the world price of steel is shown by ________
A) an upward movement along the Phillips curve to a higher inflation rate
B) an upward shift of the Phillips curve leading to higher inflation rates for any unemployment rate
C) a downward shift of the Phillips curve leading to lower inflation rates for any unemployment rate
D) a downward movement along the Phillips curve to higher unemployment rates
E) none of the above
B
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Which of the following occurs when consumers decide to save every penny of a tax cut, knowing that this tax cut must be financed by future tax increases?
A. Keynesian offset B. Ricardian equivalence C. Fiscal balancing D. Animal spirits
The horizontal short-run aggregate supply curve
A. assumes that wages and all other input prices are constant. B. assumes that opportunity cost is constant. C. assumes that there is full employment in the economy. D. shows that real GDP can be increased only when prices increase.
When a perfectly competitive firm weighs price and marginal cost and no externalities exist, it is weighing the ________ benefits to society of additional production against the ________ costs to society of that production.
A. full; marginal B. full; full C. marginal; full D. marginal; marginal
As this chapter explains, the movie A Beautiful Mind is a biography of John Nash
There is a scene in the movie where the John Nash character (played by Russell Crowe) is at a bar with several friends and has the insight that becomes what we now call a Nash equilibrium. Here is a game that summarizes what happened in that scene. Several women enter the bar; one of the women is very beautiful. All of the men would prefer to dance with the beautiful woman. They know that if one man asks the beautiful woman to dance that she will accept but that if two of the men ask her to dance she will refuse to dance with either of them. The John Nash character argues that none of the men should ask the beautiful woman to dance but should instead ask the other women. Do you think the director of this movie has studied game theory?