Author Question: An increase in taxes has the following impact on the budget constraint A) a parallel move down. ... (Read 44 times)

erika

  • Hero Member
  • *****
  • Posts: 522
An increase in taxes has the following impact on the budget constraint
 
  A) a parallel move down.
  B) a parallel move up.
  C) a tilting to the left.
  D) a tilting to the right.

Question 2

Why is there no long-run trade-off between unemployment and inflation?
 
  What will be an ideal response?



Tonyam972

  • Sr. Member
  • ****
  • Posts: 342
Answer to Question 1

A

Answer to Question 2

Because when the labor market is so tight as to cause wages and prices to rise, the resulting inflation intensifies the pressure on wages and prices (by reducing the real wage and increasing expected inflation). Since the inflation in no way balances or compensates for the low level of unemployment, the condition of too low unemployment is unsustainable in the long run.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Every 10 seconds, a person in the United States goes to the emergency room complaining of head pain. About 1.2 million visits are for acute migraine attacks.

Did you know?

Blastomycosis is often misdiagnosed, resulting in tragic outcomes. It is caused by a fungus living in moist soil, in wooded areas of the United States and Canada. If inhaled, the fungus can cause mild breathing problems that may worsen and cause serious illness and even death.

Did you know?

Though “Krazy Glue” or “Super Glue” has the ability to seal small wounds, it is not recommended for this purpose since it contains many substances that should not enter the body through the skin, and may be harmful.

Did you know?

Thyroid conditions cause a higher risk of fibromyalgia and chronic fatigue syndrome.

Did you know?

According to animal studies, the typical American diet is damaging to the liver and may result in allergies, low energy, digestive problems, and a lack of ability to detoxify harmful substances.

For a complete list of videos, visit our video library