With rational expectations, a policy that would decrease AD would certainly lead to:
a. higher inflation and lower unemployment in the short run
b. lower inflation and higher unemployment in the short run.
c. higher inflation and no change in unemployment in the short run, if people's expectations were correct.
d. none of the above.
d
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Jose consumes wallets (q1 ) and a composite of other goods (q2 ). The price of wallets is p1 and the price of other goods is p2 = 1
Jose's utility from wallets depends also on his income—with a higher income, he values a wallet more because he has more to put inside it! His utility is given by the equation U(q1,q2 ) = q1Yq2 Derive Jose's demand for wallets.
The ability of a firm to charge different customers different prices is called _____
a. price ceiling b. price discrimination c. predatory pricing d. price flooring e. base point pricing
If a fixed money growth rate of 4 percent per year is followed and the growth rate of the natural level of real GDP is 4 percent per year, the average rate of inflation is: a. 8 percent
b. 4 percent. c. zero. d. 1-2 percent.
Suppose that the wage for teachers increases relative to other occupations. We know that ________ people will work as teachers, and the total number of hours worked will ________.
A. more; increase B. more; decrease C. fewer; increase D. fewer; decrease