A. W. Phillips' 1958 paper examined unemployment and wage growth. What role, if any, does wage growth play in the modern Phillips curve?
What will be an ideal response?
The modern Phillips curve relates unemployment to inflation, rather than wages. This allows inclusion of expected inflation and price shocks as causes of inflation, in addition to the unemployment gap. But the central idea remains that changes in inflation are driven by wage changes. When wages are sticky, then unemployment gaps have a small impact on inflation, while flexible wages cause large changes in inflation.
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An external effect that generates costs to a third party is called
a. free-ridership c. a negative externality b. a positive externality d. a marginal private cost
In August 2011, Standard & Poor's (S&P) changed its rating on U.S. Treasury bonds from "AAA" to "AA+" based on the state of the federal government's budget deficit
This was the ________ a rating agency had given Treasury bonds less than a rating of "AAA". A) first time ever B) second time since the year 2000 C) fifth time in history D) first time since the Great Depression
Net benefit is equal to total benefit minus marginal cost
a. True b. False Indicate whether the statement is true or false
If a monopoly can produce a good at zero marginal cost, then its Lerner Index is
A) zero. B) one. C) infinity. D) undetermined.