If because they expect the central bank to disinflate, people reduce their inflation expectations, then is the sacrifice ratio larger or smaller the otherwise? Defend your answer by referring to the Phillips curve
The sacrifice ratio will be smaller because unemployment will rise by less. Unemployment will rise by less because if expected inflation falls, the short run Phillips curve shifts left which means that the unemployment rate will be lower at any given level of inflation.
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Suppose an apartment complex is converted to an owner occupied condominium. Suppose that the estimated value of the condominium owners' housing services is now the same as their former rent
A) GDP increases. B) GDP decreases. C) GDP is unaffected because neither the rent nor the estimate of the value of housing services is included in GDP. D) None of the above.
You draw colored balls out of a bag. You draw a red ball 30% of the time and a blue ball 70% of the time. For each draw, the blue outcome and the red outcome are
A) mutually exclusive. B) exhaustive. C) Both A and B. D) None of the above.