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Author Question: Which of the following represents the domestic demand for goods? A) C + I + G B) C + I + G + X ... (Read 64 times)

robinn137

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Which of the following represents the domestic demand for goods?
 
  A) C + I + G
  B) C + I + G + X
  C) C + I + G - IM/
  D) C + I + G + X - M/
  E) C + I + G + X + IM

Question 2

During which decade did the original Phillips curve break down? Also, briefly explain why the original Phillips curve broke during this period.
 
  What will be an ideal response?



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dreamfighter72

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Answer to Question 1

A

Answer to Question 2

The original Phillips curve broke down in the United States in the 1970s. First, the United States was affected by oil shocks that would cause an increase in both inflation and the unemployment rate. Second, individuals changed the way they formed expectations of prices. Rather than assume that this year's price level would be equal to last year's price level (i.e., zero expected inflation), individuals started to assume that previous inflation would persist.





 

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