According to the hybrid, or consensus, view of aggregate supply, the chance for an aggregate demand increase to cause inflation accelerates as
A. Unemployment increases.
B. The economy moves away from full employment.
C. The economy moves toward capacity.
D. The slope of aggregate supply becomes flatter.
Answer: C
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Assume that prices have risen in a given economy by an average of 5 percent over the last nine years. If consumers base their expectations about future price movements on that knowledge alone their forecasts rely on ________
A) reverse expectations B) adaptive expectations C) rational expectations D) monetary expectations
When observing economic growth and literacy rates, it is clear that: a. economic growth causes higher literacy rates
b. economic growth may be a consequence of improved education. c. improved levels of education may be the result of increasing economic growth. d. all of the above are likely to be true.
For each watch Switzerland produces, it gives up the opportunity to produce 50 pounds of cheese. Germany can produce one watch at a cost of 100 pounds of cheese. Which of the following is true?
a. The opportunity cost of producing watches is lower in Switzerland. b. The opportunity cost of producing cheese is lower in Switzerland. c. The opportunity cost of producing watches is the same in both countries. d. It is impossible to compare costs because the two countries are not the same size. e. In Germany, the cost of a pound of cheese is one watch.
Government policy can potentially raise economic well-being
a. in all markets for goods and services. b. in economic models, but not in reality. c. when a good does not have a price attached to it. d. never.