Explain how the original Phillips curve differs from the expectations-augmented Phillips curve (or the modified, or accelerationist Phillips curve)
What will be an ideal response?
The original Phillips curve did not take into account the effects of changes in expected inflation on inflation. The expectations-augmented Phillips curve did allow for changes in expected inflation to affect actual inflation.
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Given the strict quantity theory of money, if the quantity of money doubled, prices would:
a. fall by half. b. double. c. remain constant. d. increase somewhat but less than double.
A consumer buys only food and clothing. If the quantity of food bought increases while that of clothing remains the same, the marginal utility of food will:
A. fall, but not as fast as the marginal utility of clothing falls. B. rise, but not as fast as the marginal utility of clothing rises. C. rise relative to the marginal utility of clothing. D. fall relative to the marginal utility of clothing.