There Is No Long-Run Tradeoff Between Inflation and Unemployment Because

question 35

Multiple Choice

There is no long-run tradeoff between inflation and unemployment because

• A)the aggregate demand curve always shifts back to its baseline position.
• B)inflation always returns to the baseline level.
• C)unemployment always returns to the natural rate.
• D)the Federal Reserve does not allow such a tradeoff.
• E)potential GDP declines as the rate of inflation increases.

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Definitions:

Urea

A waste product formed in the liver, broken down from proteins, and excreted in urine.

ADH

Antidiuretic hormone, involved in regulating water balance in the body by increasing the concentration of water in the blood.

Collecting Duct

A tube-like structure in the kidney nephrons responsible for the final modification of urine and its concentration by reabsorbing water.

Permeability

The capacity of a material or membrane to allow fluids or gases to pass through it.