The costs of disinflation would be low if
A) expected inflation falls as inflation falls.
B) wage and price controls were used.
C) the Phillips curve were nearly horizontal.
D) the Phillips curve adjusted slowly to changes in inflation.
A
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Adverse selection may lead to
a. owners of used cars choosing to keep them rather than sell them at the low price that skeptical buyers are willing to pay. b. wages being stuck above the level that balances supply and demand, resulting in unemployment. c. buyers with low risk choosing to remain uninsured because the policies they are offered fail to reflect their true characteristics. d. All of the above are correct.
When beneficial externalities are present in a market, the actual output will be
A. greater than the optimal output. B. smaller than the optimal output. C. equal to the optimal output. D. either smaller or greater than the optimal output.
Idiosyncratic error is the error that occurs due to _____.
A. incorrect measurement of an economic variable B. unobserved factors that affect the dependent variable and change over time C. unobserved factors that affect the dependent variable and do not change over time D. correlation between the independent variables
The consumption function relates consumption spending to _____
Fill in the blank(s) with the appropriate word(s).