According to economist Milton Friedman,
a. the short-term validity of the Phillips curve is questionable.
b. there might be a short-term trade-off between unemployment and inflation but not a permanent trade-off.
c. trade-off happens between unemployment and inflation happens in the long run but not in the short run.
d. the long-run trade-off between unemployment and inflation comes from unanticipated inflation.
Question 2Corruption reduces growth most directly because governments invest in projects with low productivity.
a. True
b. False
Indicate whether the statement is true or false
Question 3The over hunting of U.S. buffalo that nearly caused their extinction would be an example of the tragedy of the commons.
a. True
b. False
Indicate whether the statement is true or false
Question 4Movements up along a particular short run Phillips curve are not consistent with:
a. Increases in aggregate demand.
b. Movements up along the short run aggregate supply curve.
c. Shifting inflationary expectations.
d. Movements up along a particular short run Phillips curve are consistent with all of the above.
Question 5To have significant foreign direct investment, a developing country ought to have a stable system of property rights.
a. True
b. False
Indicate whether the statement is true or false
Question 6One way to overcome an adverse selection problem when buying a used car is to hire an independent mechanic to inspect the car before making a purchase.
a. True
b. False
Indicate whether the statement is true or false
Question 7What does a vertical Phillips curve in the long run imply?
a. In the long run, the rate of unemployment will converge toward zero.
b. Higher inflation does not permanently reduce the rate of unemployment.
c. Higher inflation increases the rate of unemployment.
d. Higher inflation lowers the rate of unemployment.
Question 8Generally, there is a strong positive correlation between per capita GNP and other measures of human development.
a. True
b. False
Indicate whether the statement is true or false
Question 9Adverse selection occurs when a fully insured person fails to take as many precautions against risk as she would if uninsured.
a. True
b. False
Indicate whether the statement is true or false
Question 10Which of the following would move the economy up and to the left along a short run Phillips Curve?
a. Increases in the discount rate and increases in the interest rate the Fed pays on bank reserves.
b. Increases in taxes by the federal government combined with reductions in government purchases of goods and services.
c. Decreases in the fed funds interest rate target adopted by the Fed.
d. An increase in the expected rate of inflation.
Question 11Higher per capita GNP always means higher quality of life.
a. True
b. False
Indicate whether the statement is true or false
Question 12Information supplied to consumers by the government rarely ever helps in making better decisions.
a. True
b. False
Indicate whether the statement is true or false
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