If Workers and Firms Lower Their Inflation Expectations

question 99

Multiple Choice

If workers and firms lower their inflation expectations

• A)unemployment will rise.
• B)actual inflation will fall to match expected inflation.
• C)the short-run Phillips curve will be vertical.
• D)the short-run Phillips curve will shift downward.

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Definitions:

Required Rate of Return

The minimum annual return percentage necessary to attract individual or corporate investment into a specific security or project is known as the required rate of return.

Constant Growth Rate

The assumption that a variable, such as a company’s dividends or economy, will grow at a consistent rate over time.

Expected Dividend

The forecasted payment of dividends to shareholders, based on a company’s past dividend history and future earnings projections.

Semistrong Efficient

This term refers to a form of market efficiency that assumes all publicly available information is already reflected in stock prices, including historical and fundamental data.