If the Federal Reserve chooses to fight high inflation with contractionary monetary policy and firms and consumers expect this policy to reduce inflation, which of the following would you expect to see?
A) a downward shift of the short-run Phillips curve
B) a decrease in the long-run aggregate supply curve
C) an increase in inflationary expectations
D) a reduction in the unemployment rate
A
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The government sometimes creates an excess demand for a product by setting a maximum price at which the product may be sold to consumers. This is sometimes called a
A) subsidy. B) price floor. C) tax. D) price ceiling.
An efficient allocation of goods in an exchange economy means that
A) goods were produced by the most efficient technology available. B) no one can be made better off without making somebody else worse off. C) those made worse off are not hurt as badly as the benefits resulting from those made better off. That is, there is a net positive gain. D) in a particular production process one gets the maximum output for a given input.