Suppose That a Typical German Factory Can Produce 20 Cameras

question 255

Multiple Choice

Suppose that a typical German factory can produce 20 cameras or 1 computer in an hour, and that a typical American factory can produce 10 cameras or one computer in an hour. The opportunity cost of 20 cameras in terms of computers in the United States is

• A) 1/20 of a computer per camera.
• B) 2 computers per camera.
• C) 10 computers per camera.
• D) 1 computer per camera.

Recognize the rational expectations theory and its implications for monetary policy decisions.

Understand why a fixed-growth-rate monetary policy is not widely embraced.

Explain the relationship between inflationary expectations and the position or movement of the Phillips curve.

Identify the conditions under which the economy moves along or shifts the short-run Phillips curve.

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Definitions:

Misinformation Effect

A memory distortion phenomenon where post-event information influences an individual's recollection of an original event.

Reconstructed

Reconstructed refers to something that has been built or formed again, often with changes, based on memory or past elements.

Framed

In psychology, framing refers to the way information is presented to influence decision making and judgment.

Unchanging

Not altering, modifying, or evolving; remaining the same over time.