Question 1

The short-run Phillips curve is __________, while the long-run Phillips curve is vertical at the __________.

A. downward sloping; real wage

B. downward sloping; natural rate of unemployment

C. upward sloping; minimum wage

D. upward sloping; average nominal wage rate

E. horizontal; origin

Question 2

The natural rate of unemployment is higher in many European countries than in the United States largely because

A. European countries tend to offer more generous unemployment benefits than in the United States.

B. European countries tend to place fewer conditions on employers regarding working conditions and firing workers than in the United States.

C. the labor force is smaller in European countries than in the United States.

D. more European workers are paid an annual salary rather than an hourly wage compared to workers in the United States.

E. many European countries have recently targeted policies to fight hyperinflation rather than worrying about unemployment.