What happens to overall living standards when countries trade with other countries?
What will be an ideal response?
When countries specialize in producing goods for which they have a comparative advantage and then trade with the rest of the world, then their living standards tend to rise as people can have more of different goods than before.
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Given the accelerationist Phillips curve ?? = - 0.3 (U - 6 ) + ?, suppose that inflation in the preceding period was 3 percent, unemployment is 7 percent, and there is no price shock. The current inflation rate is ________
A) 2.7 percent B) 3 percent C) 0.9 percent D) 3.3 percent E) none of the above
If a country experiences persistently low inflation, which of the following tends NOT to occur?
A) wage indexation will become less important B) nominal wages will be set for shorter periods of time C) the markup over labor costs will decrease D) all of the above