The Negative Correlation Between Inflation and Unemployment Is Observed Because

question 82

Multiple Choice

The negative correlation between inflation and unemployment is observed because

• A)a rightward shift of the AD curve will raise unemployment in the long run and decrease inflation in the short run.
• B)a rightward shift of the AD curve will raise unemployment in the short run and decrease inflation in the long run.
• C)a rightward shift of the AD curve will reduce unemployment in the long run and increase inflation in the short run.
• D)a rightward shift of the AD curve will reduce unemployment in the short run and increase inflation in the long run.
• E)a leftward shift the AD curve will increase potential GDP and reduce inflation in the short run.

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Definitions:

Common Shares

Equity securities that represent ownership in a company, providing voting rights and a claim on a portion of the company's profits.

Financing Activities

Transactions related to obtaining or repaying capital, such as issuing equity or taking out loans.

Shareholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing ownership interest.

Cash Flow

The total amount of money being transferred into and out of a business, especially affecting liquidity.