Accommodative Policies in Response to Price Shocks Cause

question 26

Multiple Choice

Accommodative policies in response to price shocks cause

• A) more price instability if expectations augment the Phillips curve than if they do not.
• B) less price instability if expectations augment the Phillips curve than if they do not.
• C) the same significant degree of price instability regardless of whether or not expectations augment the Phillips curve.
• D) a only if expectations are formed at least in part on the basis of last year's experience.
• E) b only if expectations are formed at least in part on the basis of last year's experience.

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Definitions:

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Regression

A statistical method used to determine the strength and character of the relationship between one dependent variable and one or more independent variables.

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Individuals who were born outside of the country in which they currently reside.

Linear Model

A statistical model used to describe the relationship between one or more explanatory variables and a continuous response variable by a linear equation.