If the Fed responded to an adverse supply shock by increasing the growth rate of the money supply and maintained the higher growth rate, what would eventually happen to the short-run Phillips curve? Why?
It would shift right because expected inflation would rise.
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President Obama has discussed raising income taxes for individuals earning over $250,000 in income. Explain how these higher income taxes will affect the aggregate demand curve
What will be an ideal response?
If the average annual growth rate in real GDP for a nation during the last decade was 4 percent per year and the average annual population growth rate was 3 percent per year during the same period, then the average annual growth rate of per capita GDP was
A) 1.00 percent. B) -1.00 percent. C) 0.75 percent. D) 1.33 percent.
For a normal good, the income and substitution effects work in the ______ direction. Therefore, a change in price produces a ______ change in uncompensated demand than in compensated demand.
A. opposite; smaller B. opposite; larger C. same; smaller D. same; larger
Which of the following will cause an increase in the rental cost/user cost of capital?
A) The rate of depreciation increases. B) The real interest rate decreases. C) The expected profit from the machine decreases. D) all of the above E) none of the above