Which of the Following Leads to a Downward Shift in the Short-Run

question 253

Multiple Choice

Which of the following leads to a downward shift in the short-run Phillips curve?

• A) People expected inflation to be 5 percent last year and now expect inflation to be 3 percent this year.
• B) People expect the unemployment rate to increase.
• C) The long-run Phillips curve shifts rightward.
• D) Unexpected inflation increases.

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Definitions:

Required Rate

The minimum return that investors demand for investing in a particular asset, reflecting the risk of the investment.

Discounted Payback Period

A capital budgeting method that calculates the amount of time needed to break even from an investment in present value terms, factoring in the time value of money.

Discount Rate

In discounted cash flow analysis, it's the rate of interest used for calculating the present day value of future financial inflows.

Cash Flows

The sum of all money transactions both incoming and outgoing in an establishment, affecting its ability to maintain liquid resources.