Refer to Figure 17-7. Consider the Phillips curves depicted in the graph above. The Fed announces its intention to decrease inflation from 10 percent to 5 percent per year, and it succeeds
If the assumptions of the rational expectations school hold true, and the Fed's announcement is credible, the rate of unemployment will be ________ in the short run.
A) less than 5.5 percent B) 5.5 percent
C) between 5.5 and 7.5 percent D) 7.5 percent
B
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The above figure shows Jane's budget line and two of her indifference curves. Which of the following happens to Jane's budget line if the price of a lobster dinner increased?
A) It would rotate inward around the vertical intercept, 10 lobster dinners. B) It would rotate outward around the vertical intercept, 10 lobster dinners. C) It would rotate inward around the horizontal intercept, 20 steak dinners. D) It would rotate outward around the horizontal intercept, 20 steak dinners.
If a competitive firm's marginal costs always increase with output, then at the profit maximizing output level, producer surplus is
A) zero because marginal costs equal marginal revenue. B) zero because price equals marginal costs. C) positive because price exceeds average variable costs. D) positive because price exceeds average total costs. E) positive because revenues are increasing faster than variable costs.
A substitute is a good or service:
a. that can be used in place of another good or service. b. used with another good or service. c. that cannot be replaced with another good or service. d. that can have no demand for itself.
Generally, ________ motivates firms to enter an industry, while ________ motivates firms to exit an industry.
A. accounting profit; accounting loss B. economic profit; economic loss C. accounting profit; economic loss D. economic profit; accounting loss