Which of the following could create a movement along the short-run Phillips curve so that the unemployment rate temporarily falls below the natural unemployment rate?
A) an increase in aggregate demand and a quickly responsive wage rate
B) a decrease in aggregate demand and a sticky wage rate
C) an increase in aggregate demand and a sticky wage rate
D) an increase in aggregate supply and a sticky wage rate
E) a decrease in aggregate demand and a quickly responsive wage rate
C
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After the American Civil War, many prominent Southerners lamented the fact that the South "overproduced" cotton and "underproduced" food. In fact, the South did import a very large percentage of its food. Nevertheless, rather than reduce cotton production and grow more food, Southern farmers did the opposite because
a. they were irrational and distraught over the loss of slavery. b. the South had a comparative advantage in cotton production. c. the North had a comparative advantage in cotton production. d. corn was absolutely cheaper to produce in the North.
The monopolist's outcome in the long run differs from that of the perfectly competitive firm in that it:
A. has zero profits in the long run. B. charges a price above average total costs. C. charges a price where marginal costs equal average revenue. D. charges a price equal to MC.