The Result That No Long-Run Trade-Off Between Output and Inflation

question 22

Multiple Choice

The result that no long-run trade-off between output and inflation exists

• A) depends critically on how inflationary expectations are formed as they enter the Phillips curve.
• B) can be supported by a Phillips curve model given almost any view of how inflationary expectations are formed.
• C) is nonsense because it is most certainly not true in the short run.
• D) cannot be true if a short-run trade-off between unemployment and inflation exists.
• E) none of the above.

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Definitions:

Nitroglycerin Explosions

The sudden and violent release of energy due to the rapid decomposition of nitroglycerin, a highly explosive chemical compound used in dynamites and propellants.

Activation Energy

The minimum amount of energy that must be provided to compounds to result in a chemical reaction.

Gaseous Products

The substances formed as a result of a chemical reaction that exist in the gas state at room temperature.

Thermal Energy

the internal energy present in a system due to its temperature.