The Theory Behind the Short-Run Phillips Curve Relationship Is That

question 99

Multiple Choice

The theory behind the short-run Phillips curve relationship is that

• A) people's expectations of future inflation are based on their most recent experiences.
• B) people form expectations on the basis of all available information.
• C) monetary policy has no real effects in the long run.
• D) monetary expansion stimulates the economy,and this outcome reduces the unemployment rate.
• E) prices are flexible in the long run,causing no relationship between unemployment and inflation.

---

Definitions:

Investment

The act of allocating resources, usually money, in the expectation of generating an income or profit.

Compounded Annually

Interest on an investment or loan calculated once a year, where the interest is added to the principal.

9-Year

An undefined term likely referring to a period or duration of nine years.

Compounded Quarterly

This refers to the process where interest is calculated and added to the principal sum of an investment or loan on a quarterly basis.