According to the Modern Expectational Phillips Curve, Unemployment Will Temporarily

question 19

Multiple Choice

According to the modern expectational Phillips curve, unemployment will temporarily rise above the natural rate of unemployment when

• A) any inflation is present.
• B) inflation turns out to be lower than what people expected.
• C) inflation turns out to be higher than what people expected.
• D) inflation turns out to be equal to what people expected.

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Definitions:

Marginal Rate

The rate at which one additional unit of a variable is accounted for in the cost-benefit analysis, commonly used in the context of taxation and production.

Tax Rate

The fraction of income or profits that an individual or company needs to pay to the government as tax.

Investment Decisions

The process of deciding where to allocate resources in order to generate the highest possible returns.

Capital Gain

The increase in the value of a capital asset that gives it a higher worth than the purchase price.