For this question, assume that expectations of productivity growth adjust slowly. Now, suppose that there is a 5% increase in productivity. Explain how this 5% increase in productivity can cause changes in the unemployment rate
What will be an ideal response?
The PS curve will shift up as productivity growth occurs; however, it will now shift up by a greater amount. If expectations of productivity are slow to adjust, the WS curve continues to shift up by a smaller amount (based on past increases in A ). The real wage will rise by the actual change in productivity. The unemployment rate will, however, decrease because of the smaller shift in the WS curve.
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Which of the following would be most likely to cause the short-run aggregate supply curve to shift left?
A) A reduction in oil prices due to increased drilling. B) A decrease in investor confidence. C) A rise in government spending. D) A spike in food prices due to a drought.
If you discovered that a country had an income tax system whereby the marginal and average tax rates were the same for all income levels what might you conclude is true about the structure of this income tax system
How is it possible in other words for the marginal and average tax rate to be the same?