Suppose the Expected Inflation Rate Is 12 Percent and the Unemployment

question 306

Multiple Choice

Suppose the expected inflation rate is 12 percent and the unemployment rate is 5 percent. If the expected inflation rate increases to 13 percent,

• A) the short- run Phillips curve will shift downward.
• B) there will be a movement along the short- run Phillips curve.
• C) the natural unemployment rate will rise.
• D) the short- run Phillips curve will shift upward.

---

Definitions:

Variance

A statistical measure of the dispersion or spread in a set of data points, showing how far each number in the set is from the mean.

Coefficient Of Correlation

A statistical measure that calculates the strength of the relationship between the relative movements of two variables, represented typically by the Pearson correlation coefficient value.

Stocks

Shares in the ownership of a company, representing a claim on the company's assets and earnings.

Composed

Pertains to being made up of several parts or elements.