Which of the factors below contributed to the collapse of the Phillips curve in the 1970s?
a. Economic research proved there was no relationship between inflation and unemployment rates.
b. The U.S. government was running triple-digit deficits in the 1970s, compounding the normal shifts in aggregate demand.
c. The 1970s were full of adverse supply shocks such as the oil price increases of 1973-1974.
d. The aggregate demand curve shifted to the left at the end of the Vietnam War.
c
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When the Fed ________, the quantity of banks' reserves decreases
A) hikes taxes B) buys government securities C) lowers the required reserve ratio D) sells government securities E) raises the required reserve ratio
Increased profits provide more internal funds to finance capital investments and a major factor in lenders' and investors' decisions to provide external funds to the firm
Indicate whether the statement is true or false
The cross elasticity of demand for substitute products must:
a. be greater than one. b. be less than one. c. be zero. d. exceed zero. e. be negative.
The possibility of speculative bubbles in the stock market arises in part because
a. stock prices may not depend at all on psychological factors. b. fundamental analysis may be the correct way to evaluate the value of stocks. c. future streams of dividend payments are very hard to estimate. d. the value of shares of stock depends not only on the future stream of dividend payments but also on the price at which the stock will be sold.