The Theory Behind the Short-Run Phillips Curve Relationship Is That

question 99

Multiple Choice

The theory behind the short-run Phillips curve relationship is that

• A) people's expectations of future inflation are based on their most recent experiences.
• B) people form expectations on the basis of all available information.
• C) monetary policy has no real effects in the long run.
• D) monetary expansion stimulates the economy,and this outcome reduces the unemployment rate.
• E) prices are flexible in the long run,causing no relationship between unemployment and inflation.

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Definitions:

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A theory in political science and sociology, which suggests that society is divided between a small ruling elite and the masses or the majority.

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