An increase in the expected rate of inflation is most likely to cause an increase in ________
A) the ex post real interest rate
B) the ex ante real interest rate
C) the nominal interest rate
D) the expected real interest rate
E) none of the above
C
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For a monopoly, the market demand curve is the firm's
A) supply curve. B) marginal revenue curve. C) demand curve. D) profit function.
Some economists argue that the short-run Phillips curve is not vertical, and that monetary policy can be effective in the short run. Which one of the following is not one of the reasons for this skepticism?
A) Individuals may not be able to use information of Fed Policy to make a reliable forecast of inflation. B) Empirical evidence shows workers and firms have rational expectations. C) Contracts with workers and suppliers may hinder firms' abilities to adjust to price changes. D) Wages and prices may not adjust rapidly enough to keep the short-run Phillips curve vertical.