If People Eventually Adjust Their Inflation Expectations So That in the Long

question 36

Multiple Choice

If people eventually adjust their inflation expectations so that in the long run actual and expected inflation are the same,then policymakers

• A)can not exploit a tradeoff between inflation and unemployment in either the short or long run.
• B)can exploit a tradeoff between inflation and unemployment in the short run but not in the long run.
• C)can exploit a tradeoff between inflation and unemployment in both the short run and the long run.
• D)can exploit a tradeoff between inflation and unemployment in the long run,but not the short run.

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Definitions:

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit.

Margin of Safety

The difference between actual or projected sales and the break-even point; it measures the amount by which sales can drop before reaching the break-even point.

Profit-Volume Chart

A graphical representation that shows the relationship between a firm's profits and its volume of sales.

Cost-Volume-Profit Chart

A graphical representation that shows the relationship between a company's costs, sales volume, and profits.