If expectations are adaptive, how will the economy adjust to a new long-run equilibrium in response to expansionary monetary policy? Support your answer with a graph of the Phillips curve
What will be an ideal response?
Expansionary monetary policy increases the inflation rate. With adaptive expectations, workers and firms will underestimate inflation, resulting in a decrease in the real wage and a decrease in the unemployment rate (move from A to B on the short-run Phillips curve below). Eventually, workers and firms will adjust to the fact that inflation is higher, shifting the short-run Phillips curve up and increasing the unemployment rate to its natural rate (move from B to C in the graph below).
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In the figure above, Gap maximizes its profit if it sells ________ jackets per day
A) 100 B) 64 C) 129 D) 133
Economic analysis indicates that the monetary policy of the 1930s, which shifted back and forth between restrictive monetary policy and expansionary monetary policy, would likely result in
a. economic stability and growth in real levels of output. b. keeping the general level of prices relatively stable because the periods of restrictive policy would just offset the periods of expansion. c. an environment of uncertainty, which would lead to economic instability. d. economic stability, because changes in monetary policy can be counted on to exert a predictable impact on the economy quickly.
Which of the following policies would be advocated by someone who wants the government to follow an active stabilization policy when the economy is experiencing severe unemployment?
a. decrease the money supply b. increase government expenditures c. increase taxes d. All of the above are correct.
Which of the following is part of the uterus?
A. Areola B. Fimbriae C. Fundus D. Perineum