Along a Short- Run Phillips Curve, Suppose the Expected Inflation

question 130

Multiple Choice

Along a short- run Phillips curve, suppose the expected inflation rate is 6 per cent. If the inflation rate turns out to be 8 per cent instead,

• A)there is a movement downward along the short- run Phillips curve.
• B)there is a downward shift of the short- run Phillips curve.
• C)there is a movement upward along the short- run Phillips curve.
• D)None of the above answers is correct.

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Definitions:

Net Cash

The amount of cash that remains after deducting all operational, financial, and investment activities over a period.

Cash Basis

An accounting method where revenues and expenses are recorded when they are actually received or paid, not when they are incurred.

Operating Activities

The day-to-day functions of a business related to producing and selling its products or services, which are reflected in the cash flow statement.

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments, reflected in the cash flows of a business.