The Traditional Short-Run Phillips Curve Is

question 4

Multiple Choice

The traditional short-run Phillips curve is

• A) upward sloping.
• B) downward sloping.
• C) horizontal.
• D) vertical.
• E) U-shaped.

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Definitions:

Myopia

Refers to the difficulty human beings have with conceptualizing the more distant future. Leads to decisions that overly favor present and near-term options at the expense of more distant future possibilities.

Great Depression

A severe global economic downturn that lasted from 1929 to the late 1930s, marked by massive unemployment and the collapse of financial institutions.

Present Consumption

The act of using goods and services to satisfy current needs and desires rather than saving for future use.

Self-Control Problems

Refers to the difficulty people have in sticking with earlier plans and avoiding suboptimal decisions when finally confronted with a particular decision-making situation. A manifestation of time inconsistency and potentially avoidable by using precommitments.