The automatic adjustment mechanism that makes the economy move towards the long-run Phillips Curve is:
A. Expansionary fiscal or monetary policy
B. Inflation expectations and wage adjustments
C. Contractionary fiscal or monetary policy
D. Increases in productivity over time
B. Inflation expectations and wage adjustments
Economics
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What is the ratchet effect? How does it apply to price level changes in the economy as aggregate demand changes?
What will be an ideal response?
Economics
Which of the following would cause an increase in the demand for U.S. dollars?
A. An interest rate cut in the United States B. An interest rate cut in Europe C. An interest rate increase in Europe D. A recession in Europe
Economics