A central bank announces it will decrease the inflation rate by 10 percentage points. People are skeptical of the announcement, but do expect the central bank will reduce inflation by 5 percentage points and so expected inflation falls by 5 percentage points. If the central bank decreases inflation by only 3 percentage points then the unemployment rate will fall

Which one of the following variables is most likely to increase as production effort is increased?

a. Net revenue b. Marginal costs c. Marginal revenue d. Total costs e. Average revenue

The Phillips curve will shift down with ________ or ________

A) a positive supply shock; an increase in expected inflation B) a positive supply shock; a decrease in expected inflation C) a negative supply shock; an increase in expected inflation D) a negative supply shock; a decrease in expected inflation