If inflation rises or falls faster than people forecast in the short run but not in the long run, what are the shapes of the Phillips curves?
a. The Phillips curve is vertical in the short run, and upward sloping in the long run.
b. The Phillips curve is downward sloping in the short run, and vertical in the long run.
c. The Phillips curve is upward sloping in the short run, and horizontal in the long run.
d. The Phillips curve is vertical in the short run and long run.
b
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For any horizontal demand curve, the price elasticity of demand is:
A. infinite. B. 1. C. equal to the price of the good. D. 0.
Suppose you negotiate a one-year loan with a principal of $1000 and the nominal interest rate is currently 7%. You expect the inflation rate to be 3% over the next year. When you repay the principal plus interest at the end of the year, the actual inflation rate is 2.5%. Compute the ex ante and ex post real interest rate. Who benefits from this unexpected decrease in inflation? Who loses?
What will be an ideal response?
After the U.S. government deregulated the trucking industry:
A. profits rose. B. freight prices rose. C. freight prices fell. D. the number of trucking companies decreased.
When a reinsurance company pays a claim, they pay
A. the rebuilding contractors directly. B. the victim directly. C. the government. D. the originating insurance company.