Answer the following statements true (T) or false (F)
1. The policy implication of the long-run Phillips Curve is that, while stimulative policies may work to reduce unemployment in the short run, the only effect of such policies in the long run is to raise inflation.
2. Based on the long-run Phillips Curve, any rate of inflation is compatible in the long run with the natural rate of unemployment.
3. The adjustment mechanism that brings the economy to its long-run aggregate supply has to do with inflation-expectations, whereas the adjustment to the long-run Phillips curve has to do with wage flexibility.
4. Supply-side economists contend that aggregate supply is the relevant policy factor in influencing the price level and real output in an economy.
5. Supply-side economists recommend higher marginal tax rates to increase aggregate supply and real output.
1. T
2. T
3. F
4. T
5. F
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If its exports are greater than its imports, then a country has a:
A. trade deficit. B. trade surplus. C. government budget surplus. D. government budget deficit.
A perfectly competitive furniture-rental firm in Phoenix incurs an economic loss if the average total cost of each rental is
A) greater than the marginal revenue of each rental. B) less than the marginal revenue of each rental. C) equal to the marginal revenue of each rental. D) equal to the price of each rental. E) greater than the average variable cost of each rental.
The incidence of sales tax is determined by the
A) level of government (for example, local, state, or federal) which imposes the tax. B) federal government in all cases. C) greed of the sellers. D) price elasticities of supply and demand.
If a per-unit tax on output sold is imposed on a monopoly's product, the monopolist will increase its market price by the full amount of the tax
Indicate whether the statement is true or false