Moving along a short-run Phillips curve, a reduction in the unemployment rate is achieved by
A) reducing the size of the labor force.
B) shifting the aggregate supply curve leftward.
C) increasing potential GDP.
D) running a federal budget deficit.
E) increasing the inflation rate.
E
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If a bond was to pay off one year from now for $440 and the interest rate is 10 percent, what is the price of the bond?
A) $44 B) $400 C) $440 D) $484
If the aggregate supply curve is horizontal, an increase in aggregate demand will
A) increase both real and nominal GDP by the full multiplier effect. B) increase nominal GDP but not real GDP. C) increase the price level but not real GDP. D) increase real GDP by less than the full multiplier effect because of rising prices.
If supply increases and demand decreases, the new equilibrium price will be ________ and the new equilibrium quantity will be ________.
A. lower; lower B. higher; uncertain C. lower; uncertain D. higher; higher
With the Coase theorem, the private solution yields:
A. a less efficient outcome than a government solution would. B. the same amount of efficiency a government solution would. C. a more efficient outcome than a government solution would. D. None of these statements is true.