One theory of unemployment argues that the unemployment rate will rise when
a. people have accurate expectations regarding the inflation rate.
b. unexpected inflation causes people to be "fooled" by high absolute wages.
c. people mistakenly believe their wages have greater purchasing power.
d. people overestimate the rate of inflation.
d. people overestimate the rate of inflation.
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The basic idea behind moral hazard is that ________
A) some economic transactions impose an additional cost on society B) some economic transactions give rise to an additional benefit to society C) people tend to take more risks if they do not have to bear the costs of their behavior D) people do not reveal their true preference for goods that are non-excludable in consumption
According to the Laffer curve, an increase in marginal tax rates
a. reduces total tax revenue. b. increases total tax revenue c. reduces total tax revenue when marginal tax rates rise past a certain point. d. indicates that labor supply does not respond to changes in tax rates.
Static tax analysis assumes
A) all of the present tax rates will be in place for a minimum of twenty years. B) changes in the tax rates have no effect on the tax base. C) changes in the tax rates have no effect on tax revenue. D) changes in the tax rates will change the tax base.
What is the short-run Phillips curve and what observations does it make?