If inflation expectations decline, then the short-run Phillips curve shifts
a. left, so that at any inflation rate unemployment is lower in the short run than before.
b. right, so that at any inflation rate unemployment is lower in the short run than before.
c. right, so that at any inflation rate unemployment is higher in the short run than before.
d. left, so that at any inflation rate unemployment is higher in the short run than before.
a
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Decreasing marginal returns occur in the short run as more labor is hired to work in a fixed sized plant because
A) less efficient and less productive workers are hired. B) adding more workers exhausts the possible gains from specialization. C) the entrepreneur does not know how to manage more workers. D) each worker will produce more than the worker previously hired. E) the plant becomes less specialized.
Monetary policy credibility has the benefit of ________
A) stabilizing inflation in the short run when faced with positive demand shocks B) stabilizing economic activity in the short run when faced with positive demand shocks C) transmitting the effect of aggregate demand shocks onto short-run aggregate supply D) enhancing the job opportunities of Federal Reserve officials after they leave the central bank