How Does a Decrease in the Expected Rate of Inflation

question 46

Multiple Choice

How does a decrease in the expected rate of inflation shift the Phillips curves?

• A) It shifts both the short-run and long-run Phillips curves to the right.
• B) It shifts the long-run Phillips curve left and the short-run Phillips curve right.
• C) It shifts only the short-run Phillips curve to the right.
• D) It shifts only the short-run Phillips curve to the left.

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Definitions:

Idle Capacity

The unused portion of a company's production capacity, where resources such as space, labor, or equipment are underutilized.

Contribution Margin

The amount of revenue remaining after deducting variable costs, contributing to covering fixed costs and profit.

Standard Sensor

A predefined device used to detect or measure physical properties.

Special Sensor

A device designed to detect, measure, and respond to specific inputs from the physical environment, such as light, heat, motion, moisture, pressure, or any one of a great number of other environmental phenomena.