If Wages and Prices Adjust Slowly, We Would Expect Expansionary

question 215

Multiple Choice

If wages and prices adjust slowly, we would expect expansionary monetary policy to be

• A)less likely to reduce the natural unemployment rate.
• B)more likely to reduce inflation.
• C)more likely to affect the unemployment rate.
• D)more likely to result in a vertical short-run Phillips curve.
• E)less likely to affect investment spending.

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Definitions:

Total Utility

The full satisfaction experienced when consuming an exact aggregate quantity of a good or service.

Equal-Elevation Lines

Contour lines on a map representing points of equal elevation above a reference level, typically sea level.

Total Utility

refers to the total satisfaction gained from consuming a particular quantity of goods or services.

Marginal Utility

Marginal utility is the additional satisfaction or benefit (utility) a consumer derives from purchasing one more unit of a good or service.