How has macro-policy changed since the 1970s? How have the views of economists on the trade-off between inflation and unemployment changed?
In the 1970s, expansionary policies were pursued. In the 1980s and 1990s, macro-policy was focused on achieving low and steady rates of inflation. In the 1970s, most economists believed there was a permanent trade-off between inflation and unemployment. However, starting in the 1980s, most economists believed there is no trade-off between inflation and unemployment in the long run.
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Consider the following three statements:
i. You can either stand during a college football game or you can sit. You believe that you will see the game very well if you stand and others sit but that you will not be able to see at all if you sit and others stand. You therefore decide to stand. ii. Your friend tells you that he expects many people to stand at football games. iii. An economist studies photos of many college football games and estimates that 75 percent of all fans stand and 25 percent sit. Which of these statements deals with optimization, which deals with equilibrium, and which deals with empiricism? Explain.
Some argue that U.S. workers cannot compete with cheap labor from many developing nations. This
A) is true and is a justification for tariffs to protect domestic jobs. B) is true and it is has been found that tariffs in these cases can save thousands of jobs and benefit the economy. C) is true but the benefits of free trade are still such that tariffs should not be placed on these industries. D) is not true, as evidenced by the fact that the United States carries on a lot of trade with countries that have lower wages.
The owners of capital resources are compensated according to the
a. purchase price of the capital stock. b. marginal product of capital. c. value of the marginal product of capital. d. absolute level of production of final goods and services.
As the tax rate decreases, the absolute value of the tax multiplier
A. increases. B. does not change. C. decreases. D. could either increase or decrease depending on the value of the MPC.