If the Fed moves the economy upward along the short-run Phillips curve from an initial inflationary equilibrium, what is happening?
a. Unemployment is rising above the natural rate, output is decreasing, and inflation is decreasing.
b. Unemployment is falling below the natural rate, output is decreasing, and inflation is increasing.
c. Unemployment is rising above the natural rate, output is increasing, and inflation is decreasing.
d. Unemployment is falling below the natural rate, output is increasing, and inflation is increasing.
e. Unemployment is falling below the natural rate, output is increasing, and inflation is decreasing.
D
You might also like to view...
If identical firms sell an undifferentiated product, advertising is likely to be
A) used to attack the rivals' products. B) collectively undertaken by the industry group. C) strategically aimed at deterring entry. D) focused on secret ingredients.
Firms in long-run equilibrium in a perfectly competitive industry will produce at the low points of their average total cost curves because
a. free entry implies that long-run profits will be zero no matter how much each firm produces. b. firms seek maximum profits and to do so they must choose to produce where average costs are minimized. c. firms maximize profits and free entry implies that maximum profits will be zero. d. firms in the industry desire to operate efficiently.