Why is there no long-run trade-off between unemployment and inflation?
What will be an ideal response?
Because when the labor market is so tight as to cause wages and prices to rise, the resulting inflation intensifies the pressure on wages and prices (by reducing the real wage and increasing expected inflation). Since the inflation in no way "balances" or "compensates" for the low level of unemployment, the condition of "too low" unemployment is unsustainable in the long run.
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If the demand for an agricultural product is inelastic, a bumper crop will:
A. raise price and decrease total revenues. B. raise price and increase total revenues. C. lower price and decrease total revenues. D. lower price and increase total revenues.
Econometrics is the statistical analysis of economic data.
A. True B. False C. Uncertain