The origin of the Phillips curve is the idea that an increase in
a. AD will lead to more inflation and more unemployment.
b. AD will lead to more inflation and lower unemployment.
c. AS will lead to lower inflation and lower unemployment.
d. AS will lead to less inflation and higher unemployment.
b
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In the two-period model, the nature of the asymmetric information is that
A) only the bank knows who the bad borrowers are. B) only borrowers know whether they are bad or not. C) only borrowers know the value of their collateral. D) only banks can value the collateral.
Explain the macroeconomic effects of a tax cut according to the Ricardian Equivalence proposition. Include in your answer the IS-LM graph that shows the effects of this tax cut
What will be an ideal response?
An incumbent's threat to retaliate after a potential competitor enters the market will be taken seriously by potential competitors if
A) the incumbent can still earn a profit after carrying out the threat. B) the incumbent earns greater profit carrying out the threat than by accommodating entry. C) the potential entrant cannot earn a profit if the threat is carried out. D) the potential entrant's profit exceeds the incumbent's if the threat is carried out.
The multiple by which total deposits can increase for every dollar increase in ________ is the money multiplier.
A. loans B. liabilities C. reserves D. M1