Friedman and Phelps Argued That

question 3

Multiple Choice

Friedman and Phelps argued that

• A)if peoples' inflation expectations were fixed,then an increase in the money supply growth rate could not change output in the short or long run.
• B)if peoples' inflation expectations were fixed,then a decrease in the money supply growth rate could raise output and unemployment in the short run.
• C)any change in unemployment created by making aggregate demand increase more rapidly is temporary because people eventually revise their inflation expectations.
• D)None of the above is correct.

Understand the application of marginal analysis in "either-or" decisions.

Understand the relationship between marginal costs and production levels.

Identify when a production level is optimal based on marginal costs and benefits.

Analyze how marginal benefits change with consumption.

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Definitions:

Risky Impulses

Sudden urges to engage in behaviors that could be dangerous or have negative consequences.

Concrete Problems

Issues or challenges that are tangible and can be directly observed or physically dealt with, as opposed to abstract problems.

Hypothetical-Deductive Reasoning

The process of forming hypotheses and systematically testing them to solve problems or arrive at conclusions.

Metacognition

The awareness and understanding one has of their own thought processes, often referred to as "thinking about thinking."