In the Friedman-Phelps analysis, when inflation is less than expected, the unemployment rate is less than the natural rate
a. True
b. False
Indicate whether the statement is true or false
False
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A reduction in the supply of labor will cause
A. wages to increase and employment to increase. B. wages to increase and employment to decrease. C. wages to decrease and employment to increase. D. wages to decrease and employment to decrease.
If the economy is initially at equilibrium and an unexpected decline in aggregate demand takes place, in the short run aggregate output will
A) fall in the new classical view, but not in the new Keynesian view. B) fall in the new Keynesian view, but not in the new classical view. C) fall in both the new Keynesian and new classical views. D) remain at full employment in both the new classical and new Keynesian views.
Refer to the graph below.
As you move from point A to point B:
A. production efficiency is decreased because we are no longer on the production possibility curve. B. production efficiency is decreased because we have less of good Y. C. the change in efficiency is unclear. D. production efficiency is increased because we have more of good X.
If the marginal revenue product of the last worker hired exceeds the marginal factor cost of the worker, the firm would be better served if it
A) hires additional workers. B) maintains its current level of workers already hired. C) lays off the last worker hired. D) None of the above is a good option for a profit-seeking firm.