Consider the AD/AS Model with a Constant Rate of Inflation

question 66

Multiple Choice

Consider the AD/AS model with a constant rate of inflation.In this case,

• A)there is no effective set of monetary policy tools to reduce inflation.
• B)there is a tendency for the price of bonds to be increasing rapidly.
• C)the AS curve is shifting upward because of inflation expectations.
• D)expected inflation tends to be significantly less than actual inflation.
• E)the AD curve is not shifting at all.

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Definitions:

Labor Unions

Organizations that represent the collective interests of workers in negotiations with employers over wages, working conditions, and other employment terms.

Sherman Antitrust Act

An 1890 United States federal statute that prohibits monopolistic business practices and supports competition in the marketplace.

Unions

Associations of workers formed to negotiate collectively with employers over wages, work conditions, and rights; another term for labor unions.

Industrial Relations School

An academic field of study that focuses on the relationships between employers, employees, unions, and the government in the workplace and the labor market.