Stagflation can be defined as a situation characterized by
a. rising prices and rising output.
b. rising prices and falling output.
c. falling prices and falling output.
d. falling prices and rising output.
b
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Why are cooperative arrangements difficult to negotiate and maintain?
A) They require a long-term policy commitment, but politics is often focused on the short run. B) No one understands the benefits and consequences. C) Trading nations do not trust one another. D) They have to be approved by the IMF, which takes years to accomplish.
In case of a backward-bending labor supply curve:
a. the income effect of a higher wage offsets the substitution effect. b. the substitution effect of a higher wage offsets income effect. c. the substitution effect of a higher wage equals income effect. d. there is no income effect at a higher wage rate.