Assume that expected inflation is based on the following: ?et = ??t-1. An increase in ? will cause
A) an increase in the natural rate of unemployment.
B) a reduction in the natural rate of unemployment.
C) no change in the natural rate of unemployment.
D) inflation in period t to be more responsive to changes in unemployment in period t.
C
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Opportunity cost is objective; therefore, its value does not change as circumstances change
a. True b. False
Answer the following statement(s) true (T) or false (F)
1. An outcome that is Pareto optimal is preferred by both players to all other possible outcomes. 2. A Nash equilibrium need not be Pareto optimal, and a Pareto-optimal outcome need not be a Nash equilibrium. 3. In the Prisoners' Dilemma game, the only outcome that is not Pareto optimal is also the game's only Nash equilibrium. 4. When a game is played sequentially, the first player will have an advantage over the second player. 5. A Cournot equilibrium arises when one player announces his strategy before the other.