An Increase in Expected Inflation Will Affect the Short-Run Phillips

question 88

Multiple Choice

An increase in expected inflation will affect the short-run Phillips curve:

• A) by shifting it downward; the actual rate of inflation at any given unemployment rate will fall by the same amount.
• B) by shifting it upward; the actual rate of inflation at any given unemployment rate will also be higher when the expected inflation rate is higher.
• C) by moving along the same curve, where it equals the actual rate of inflation.
• D) only if the economy is at the nonaccelerating inflation rate of unemployment.

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Definitions:

Rhonch

A low-pitched, snore-like sound heard upon auscultation of the chest, often caused by obstruction of the airways.

Eupnea

Normal, unlabored breathing or respiratory activity.

Eu-

A prefix meaning good, well, true, or genuine.

Alveoli

Tiny air sacs in the lungs where the exchange of oxygen and carbon dioxide takes place.