When the expected inflation rate changes, what happens to the short-run Phillips curve? To the long-run Phillips curve?
What will be an ideal response?
When the expected inflation rate changes, the short-run Phillips curve shifts but the long-run Phillips curve does not shift. In particular, if the expected inflation rate increases, the short-run Phillips curve shifts upward and if the expected inflation rate decreases, the short-run Phillips curve shifts downward.
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The fact that many inputs are fixed in the short run but variable in the long run has little impact on the firm's cost curves
a. True b. False Indicate whether the statement is true or false
Refer to the diagrams. The firm:
A. is a monopsonist in the hiring of labor.
B. must be selling its product in an imperfectly competitive market.
C. is a "wage taker"
D. must pay a higher marginal resource cost for each successive worker.