Which of the following explains why the original Phillips curve relation disappeared or, as some economists have remarked, "broke down" in the 1970s?
A) Individuals assumed the expected price level for the current year would be equal to the actual price level from the previous year.
B) Individuals assumed that expected inflation would be zero
C) Individuals changed the way they formed expectations of inflation.
D) Monetary policy became contractionary.
E) More labor contracts became indexed to changes in inflation.
C
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If the demand curve for a good is horizontal and the price is positive, then a leftward shift of the supply curve results in
A) a price of zero. B) an increase in price. C) a decrease in price. D) no change in price.
Capital flight raises a country's real exchange rate
a. True b. False Indicate whether the statement is true or false
Two CEOs from different firms in the same market collude to fix the price in the market. This action violates the
a. Clayton Act of 1914. b. Sherman Antitrust Act of 1890. c. Crandall-Putnam ruling of 1983. d. Jackson-Microsoft ruling of 2000.
The United States sees its overall price level decline, ceteris paribus. Considering this, which of the following actions would most likely happen next?
a. U.S. firms invest more money in bonds and savings accounts, which lowers interest rates. b. U.S. consumers spend less money, which increases the quantity of real GDP demanded. c. U.S. firms hold more money to buy goods and services, which raises interest rates. d. U.S. households borrow more money, which decreases the demand for loanable funds.