What will actual unemployment be (in relation to the natural rate) in each of the following cases? Use a graph of the modern Phillips curve in your answer
a. Decision makers underestimate inflation.
b. Decision makers overestimate inflation.
c. Decision makers correctly forecast inflation.
a. Actual unemployment will fall below the natural rate.
b. Actual unemployment will rise above the natural rate.
c. Actual unemployment will equal the natural rate.
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Comparative advantage implies that you
A) can produce more units of a good or service than another. B) can produce a good or service at a lower opportunity cost. C) can produce goods with more capital resources. D) can produce goods with more human resources.
Price discrimination occurs when:
a. firms maximize their profit by setting price equal to marginal cost. b. a seller charges different prices to different consumers of the same product or service. c. a seller charges the same price to consumers of a different product or service. d. a seller charges different prices to consumers, discriminating by race or gender of the consumer.
The three-step procedure for economic analysis
a. works better in macroeconomics than in microeconomics b. begins with characterizing the market c. helps governments decide how to change the market equilibrium d. focuses on goals and constraints e. is used only in microeconomics
Which of the following causes a decrease in demand for a normal good?
A. increase in price of a complement B. increase in price of a substitute C. increase in income D. increase in price