Small pizza parlors exist in just about every town. Anyone can open a pizza parlor, and the pizzas from one parlor typically have different tastes and sizes than pizzas from another parlor. Thus, the pizza industry is an example of

The shifts of the short-run and long-run Phillips curves in the figure above are the result of

A) an increase in the expected inflation rate. B) an increase in the natural unemployment rate. C) a decrease in the natural unemployment rate. D) an increase in the actual inflation rate. E) a decrease in the expected inflation rate.

Answer the following questions true (T) or false (F)

1. Consider a country that produces only two goods: parrots and iguanas. Suppose it is impossible for this country to increase its production of parrots without producing fewer iguanas. In this case, its current output combination is efficient. 2. Any output combination along a production possibilities frontier is associated with fully utilized resources. 3. A decrease in population shifts the production possibilities frontier outwards over time.