If the Public Correctly Perceives That the Central Bank Will

question 34

Multiple Choice

If the public correctly perceives that the central bank will reduce inflation,then

• A)the short-run Phillips curve shifts right,and the sacrifice ratio will be higher.
• B)the short-run Phillips curve shifts right,and the sacrifice ratio will be lower.
• C)the short-run Phillips curve shifts left,and the sacrifice ratio will be higher.
• D)the short-run Phillips curve shifts left,and the sacrifice ratio will be lower.

---

Definitions:

Competitive Factor Markets

Refers to markets where factors of production (such as labor, capital) are bought and sold in a competitive environment, ensuring prices are influenced by supply and demand.

Production Function

An equation that describes the relationship between inputs (like labor and capital) and the maximum output that can be produced with those inputs.

Prices

The monetary value assigned to goods, services, or commodities, determining the amount a consumer pays to acquire them.

Intoxicant

A substance that causes excitement or diminished control over faculties, typically by means of alcohol or drugs.