If People Correctly Anticipate That Inflation Will Fall by 1

question 151

Multiple Choice

If people correctly anticipate that inflation will fall by 1%, then

• A)the short-run Phillips curve shifts right and unemployment is unchanged.
• B)the short-run Phillips curve shifts right and unemployment rises.
• C)the short-run Phillips curve shifts left and unemployment is unchanged.
• D)the short-run Phillips curve would shift left and unemployment falls.

---

Definitions:

Joseph Schumpeter

An economist known for his theories on economic development and creative destruction.

Theory of Innovations

A conceptual framework that explains how new ideas, products, and practices spread within a society or from one society to another, often driving economic growth and social change.

Unemployment Insurance Benefits

Financial payments made by the government to individuals who are unemployed and meet certain eligibility requirements.

Discouraged Worker

An individual who is not actively seeking employment due to a belief that no jobs are available for them or there are no suitable job vacancies.