The quantity of real GDP supplied decreases if the price level ________ because it ________ profits
A) falls; decreases
B) rises; increases
C) rises; decreases
D) falls; increases
E) None of the above answers is correct because the AS curve is vertical so that the quantity of real GDP supplied does not change when the price level changes.
A
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The lack of a long-run tradeoff between the unemployment rate and the inflation rate means the long-run Phillips curve is
A) horizontal. B) vertical. C) upward sloping. D) downward sloping. E) U-shaped, with higher inflation initially decreasing unemployment and then increasing it back to the natural unemployment rate.
Which of the following occurs when party A would like to change his behavior if party B would change hers, and vice versa, and yet the two changes do not take place because the decisions of A and B are made independently?
a. Moral hazard b. Coordination failure c. Leakage d. Lemon problem