Answer Happy

17. (2.0) When the actual change in the price level differs from its expected change, which of the following can explain why firms. might change their production? A B C both menu costs and mistaking a price level change for a change in relative prices menu costs but not mistaking a price level change for a change in relative prices mistaking a price level change for a change in relative price but not menu costs neither menu costs nor mistaking a price level change for a change in relative prices.

18. (2.09) Suppose a central bank takes actions that will lead to a higher inflation rate. The public, however, is slow to adjust its expectation of inflation. Then, in the short run, unemployment A B C D rises. As inflation expectations adjust, the short-run Phillips curve shifts right. rises. As inflation expectations adjust, the short-run Phillips curve shifts left. falls. As inflation expectations adjust, the short-run Phillips curve shifts right. falls. As inflation expectations adjust, the short-run Phillips curve shifts left.