Based on the theory of the expectations-augmented Phillips curve, if the expected inflation rate is 2%, the short-run Phillips curve will
A. be horizontal at an expected inflation rate of 2%.
B. have a kink at an inflation rate of 2%.
C. be the same as the long-run Phillips curve.
D. intersect the long-run Phillips curve at the natural unemployment rate, when the inflation rate is 2%.
Answer: D
You might also like to view...
For a restaurant, all the following are examples of variable costs, except
a. Labor costs b. Cost of raw materials c. Rents on dining space d. None- all of them are variable costs
In general, the unemployment rate does not vary greatly by:
A. educational status. B. gender. C. age. D. height
Which of the following best illustrates diversification?
a. A company that produces many different products decides to produce fewer. b. After selling stock, corporate management spends funds on projects with greater risks than shareholders had anticipated. c. Instead of holding only the stocks of companies engaged in the banking business, a person decides to hold stock in a number of different companies producing different goods and services. d. A person decides to purchase only stocks that have paid high dividends in the past.
If individuals are rational, they should choose actions that yield the:
A. largest total benefits. B. largest economic surplus. C. smallest total costs. D. smallest economic surplus.