The Short-Run Phillips Curve Shows Only a Short-Run Tradeoff Between

question 33

Multiple Choice

The short-run Phillips curve shows only a short-run tradeoff between the unemployment rate and the inflation rate because in the long run, the

• A) inflation rate returns to the natural inflation rate and so there is no long-run tradeoff between the inflation rate and the unemployment rate.
• B) inflation rate returns to the natural inflation rate and the unemployment rate returns to the natural unemployment rate.
• C) unemployment rate returns to the natural unemployment rate and so there is no long-run tradeoff between the inflation rate and the unemployment rate.
• D) natural unemployment rate increases.
• E) expected inflation rate increases.

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Definitions:

Hockey Pucks And Hockey Sticks

Items used in the sport of hockey, with the puck being the object teams attempt to score with, and the stick used to hit the puck.

Necessity

A good or service that is essential for survival and basic well-being, such as food or shelter.

Price-Inelastic

Describes a situation where the demand for a product or service is relatively unaffected by changes in its price.

Water

A transparent, tasteless, odorless, and nearly colorless chemical substance that is the main constituent of Earth's hydrosphere and the fluids of most living organisms.