An Increase in the Expected Inflation Rate Shifts the

question 84

Multiple Choice

An increase in the expected inflation rate shifts the

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

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Definitions:

Compounded Semiannually

Interest calculated twice per year, with the first period's interest being added to the principal before the second period's interest is calculated.

Strip Bond

A financial instrument obtained by separating the coupons from the principal of a bond, which then sells each part as a zero-coupon bond.

Semi-Annually Compounded

Pertaining to the interest calculation method where the interest is compounded and added to the principal amount twice a year.

Compounded Annually

The process of earning interest on both the initial principal and the accumulated interest from previous periods on an annual basis.