If employees and employers always accurately predict inflation, what is the shape of the Phillips curve?
a. It is horizontal in the short and long run.
b. It is vertical in the short and long run.
c. It is vertical in the short run and upward sloping in the long run.
d. It is downward sloping in the short run and vertical in the long run.
b
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The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
As diseconomies of scale begin to outweigh the economies of scale,
A. the long-run average cost curve begins to slope upward. B. the long-run average cost curve begins to slope downward. C. the long-run average cost curve becomes horizontal and continues this way into infinity. D. the long-run average cost curve is unaffected.