The Long-Run Response to a Decrease in the Growth Rate

question 139

Multiple Choice

The long-run response to a decrease in the growth rate of the money supply is shown by shifting which of the Phillips curves and in what direction?

• A) by shifting the short-run and long-run Phillips curves left
• B) by shifting the short-run and long-run Phillips curves right
• C) by shifting only the short-run Phillips curve left
• D) by shifting only the short-run Phillips curve right

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Definitions:

Private Goods

Goods that are both rivalrous and excludable, meaning consumption by one person reduces availability for others and access can be restricted.

Tragedy of the Commons

A situation in which individual users, acting independently according to their own self-interest, deplete or spoil shared resources, even though it is contrary to the group's long-term interests.

Private Good

A product or service that is individually consumed and can be easily excluded from non-payers, making it rivalrous in consumption.

Subsidize

Financial support given by the government or another organization to reduce the cost of goods, services, or activities, often to encourage development or consumption.