What is the Phillips curve? What does the Phillips curve suggest about optimal policy?
What will be an ideal response?
The Phillips curve shows a trade-off between unemployment and inflation. With the unemployment rate on the horizontal axis and inflation on the vertical, the Phillips curve is pictured as a downward sloping curve. If the curve is a suitable representation of the economy, in the short run policy makers can choose the combination of inflation and unemployment that they want.
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A monopsonist hires the amount of labor where the marginal revenue product of labor equals the:
a. price of the monopsonist's product. b. wage rate. c. marginal factor cost of labor. d. marginal product of labor.
Economic theory simplifies relationships to explain how the relationships interact.
Answer the following statement true (T) or false (F)