According to the Phillips Curve Relationship, a Contraction in Potential

question 29

Multiple Choice

According to the Phillips curve relationship, a contraction in potential GDP for whatever reason can be expected to

• A) cause prices to climb as long-run equilibrium is reachieved.
• B) cause prices to fall as long-run equilibrium is reachieved.
• C) cause no effect on prices as employment adjusts in the long run.
• D) cause no effect on real GDP because price adjustments would reachieve long-run equilibrium.
• E) none of the above.

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Definitions:

Behavioral/social Learning

A theory suggesting that behavior is learned through the observation of others and the outcomes of their actions.

Depressed Person

An individual suffering from depression, a psychological condition marked by persistent sadness, loss of interest, and a range of emotional and physical problems.

Environment

The surroundings or conditions in which a person, animal, or plant lives or operates, including both natural and built factors.

Psychoanalytic Approach

A theory of personality and therapeutic technique that emphasizes unconscious motives and conflicts as the roots of human behavior.