Based on the data in this table,
U ? ?
period 1 6 1 4
period 2 8 0 3.2
period 3 8 2 4.4
If the natural rate of unemployment is steady at 7 percent, and, in period four, there is no price shock and unemployment is 8 percent, then the inflation rate in period 4 will be ________ percent.
A) 4.4
B) 3.6
C) 3.4
D) 1.6
E) none of the above
B
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If a firm faces perfectly competitive product and factor markets and the marginal product of labor and capital are 4 and 9, respectively, while the wage rate is $2 and the rental rate on capital is $4, the firm should
A) use relatively more capital. B) use relatively less capital. C) increase all inputs proportionately. D) decrease all inputs proportionately.
"If the price of wine increases, the quantity purchased will increase." Is this a positive or a normative economic statement? Explain your answer