Keynes argued that ______ prevents the market solution from working rapidly enough to avert a(n) ______.
a. wage inflexibility; increase in the price level
b. disinflation; prolonged inflationary gap
c. low demand; unexpected positive shock
d. wage inflexibility; prolonged recession
d. wage inflexibility; prolonged recession
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Advances in productivity increase supply because they might
A) increase the price expected in the future. B) decrease the cost of production. C) increase the number of firms producing the good. D) raise the prices of resources used to produce the good. E) decrease the number of goods available.
The natural rate hypothesis concludes that when the inflation rate increases, then in the long run there is
A) an upward movement along the short-run Phillips curve. B) an upward shift of the short-run Phillips curve. C) a downward shift of the short-run Phillips curve. D) no change at all in the short-run Phillips curve. E) a downward movement along the short-run Phillips curve.