Under adaptive expectations theory, an increase in the short-run ...

[jenna1]

Under adaptive expectations theory, an increase in the short-run aggregate demand curve ____ the inflation rate and ____ the unemployment rate.
 a. increases; increases
  b. increases; decreases
  c. increases; does not change
  d. decreases; increases

Question 2

Suppose the price of gasoline rises and consumers cut back on their use of gasoline relative to other consumer goods. This situation would contribute to which bias in the consumer price index?
 a. Substitution bias.
  b. Transportation bias.
  c. Quality bias.
  d. Indexing bias.

[Dunkey]

Answer to Question 1

b

Answer to Question 2

a

[jenna1]

Excellent

[parshano]

Gracias!