One way in which the Phillips curve is misinterpreted is to think of it as
A. a model of economic activity that explains changes in unemployment and inflation by changes in aggregate demand.
B. a statistical relationship between inflation and unemployment.
C. depicting a number of alternative equilibrium points the economy could achieve.
D. All of these responses are correct.
Answer: C
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During the production process Ajax Corporation releases pollution into the air. Ajax Corporation operates in a monopolistic competitive industry. Which of the following statements addresses the pollution situation?
A) Ajax is taking advantage of asymmetric information. B) This is an example of a market failure and is a reason for the government to regulate the industry. C) The quality of the product could be improved if the amount of pollution can be reduced. D) This is known as the lemons problem.
Refer to the above graphs. Which pairs of budget constraints represent only a decrease in the price of good A, but no change in income or change in the price of good B?
A. Graph A B. Graph B C. Graph C D. Graph D
Figure 17-2
In , in the absence of trade, the domestic price of shoes is Pn. Since many foreign countries have a comparative advantage in the production of shoes, when the United States begins to trade, the domestic price will fall to the world price. When this happens, what does the quantity Qc through Qp represent?
a.
the quantity of shoes that the United States imports
b.
an increase in the world consumption of shoes
c.
the quantity of shoes that the United States exports
d.
a reduction in the world consumption of shoes
The cyclical deficit:
A. is the deficit that exists if the economy is at potential income. B. rises as the economy moves below potential output. C. is not affected by changes in actual income or potential income. D. rises as the economy expands and falls as the economy contracts.