Based on the long-run Phillips curve, we can conclude that expected inflation plays:
A. a minor role in determining inflation.
B. an uncertain role in determining inflation.
C. an important role in determining inflation.
D. no role in determining inflation.
Answer: C
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If real GDP decreased by 1% and nominal GDP increased by 2%, then output:
a. increased and the price level increased. b. increased and the price level decreased. c. decreased and the price level increased. d. decreased and the price level decreased.
What shape of LRAC curve indicates that any company that is producing about the same number of units shown in the middle of the curve will be able to compete on costs?
a. Flat-bottomed curve b. U-shaped curve c. Curve trending down from left to right d. Curve trending up from left to right
Drinking a can of cola gives Richard 20 utils of satisfaction. How many additional utils would you expect Richard would get from drinking a second can of cola?
(a) 20 utils. (b) Less than 20 utils. (c) More than 20 utils. (d) 40 utils.
The most volatile component of aggregate demand is
A. consumption spending. B. government spending. C. investment spending. D. net exports.