An Important Feature of the Inflation-Expectations Augmented Aggregate Supply Curve

question 36

Multiple Choice

An important feature of the inflation-expectations augmented aggregate supply curve is that

• A)unemployment cannot increase as long as inflationary expectations remain constant
• B) output will be above the full-employment level if actual prices are below expected prices
• C)if actual prices are above expected prices, the real wage rate is too high to achieve full employment
• D)the full-employment level of output is supplied if expected prices are equal to actual prices
• E)all of the above

---

Definitions:

Preference Decision

A decision in which the acceptable alternatives must be ranked.

Minimum Required

The least amount that must be maintained or achieved in a specific scenario, such as a bank balance or stock level.

Screening Decision

A decision as to whether a proposed investment project is acceptable.

Internal Rate

Often referred to as the internal rate of return (IRR), it is a rate of return used in capital budgeting to measure and compare the profitability of investments.