Suppose the Expected Inflation Rate Is 8 Percent and the Unemployment

question 134

Multiple Choice

Suppose the expected inflation rate is 8 percent and the unemployment rate is 3 percent. If the inflation rate rises to 10 percent and the expected inflation rate does not change,

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

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Definitions:

Money Orders

A financial instrument issued by a bank or postal service that allows the person named on the order to receive a specified amount of cash on demand, often used for payments when checks are not accepted.

Branch Banking

Banking operations in which a financial institution operates multiple branches, each providing banking services to customers.

Interest Rate Changes

Variations in the cost of borrowing money, often influenced by central banking policy to control inflation and economic growth.

Demand For Money

This represents the inverse relationship between the level of money balances and the price of holding money balances.