An Increase in the Expected Inflation Rate Shifts the

question 251

Multiple Choice

An increase in the expected inflation rate shifts the

• A) long-run Phillips curve downward.
• B) long-run Phillips curve upward.
• C) short-run Phillips curve upward.
• D) short-run Phillips curve downward.

---

Definitions:

Utility-maximizing Investors

Investors who strive to achieve the highest possible level of satisfaction or utility from their investment choices, based on their preferences and risk tolerance.

High P/E

Refers to a stock or market with a Price-to-Earnings ratio significantly above the average, often signaling high investor expectations.

Earnings Expectations

Predictions or forecasts about a company’s future earnings, often influencing stock prices and investor behavior prior to the actual earnings announcements.

Stock-price Expectations

Anticipated future prices of stocks based on market analysis, trends, and investor sentiment.