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To show the gradual development of inflationary pressures in the postwar U.S. economy, and to show why these pressures posed problems for policymakers and also for Keynesian economics.
Inflation occurs whenever:
the average price of most goods and services rises.NEXT QUESTION
When prices creep up slowly over a period of several years at a rate of two or three percent per year, what is the LIKELY impact on production? Such inflation will probably:
increase output in the short run.NEXT QUESTION
Which of the following MUST decline in order to slow demand-pull inflation?
George B. is disgusted with the way things have been going in the economy. Like many of his friends, he has been out of work for some months and has all but given up looking for work as a machinist. With his savings virtually depleted and unemployment benefits about to run out, he feels he’ll have little choice but to take whatever job he can get, whether he is able to use his skills or not. “Prices keep going up, up, up,” he sighs. “Everything costs more every time you go to the store—and still you can’t get work. Where are we supposed to get the money to pay for it all?” The situation George is describing in this scenario can BEST be termed:
Based on the diagram below, we can conclude that the maximum national output and employment will occur when the economy is operating in:
Range C.NEXT QUESTION
Which of the following is the BEST appraisal of inflation and unemployment during the late 1970s and early 1980s?
The U.S. has experienced less inflation than many European nations, but our unemployment rate has been consistently higher.RESTART QUIZ