-Comparing the Short-Run Phillips Curve and the Long-Run Phillips Curve

question 23

Multiple Choice

-Comparing the short-run Phillips curve and the long-run Phillips curve, we see that there is

• A) only a long-run tradeoff between inflation and unemployment but not a short-run tradeoff.
• B) no relationship between the two curves.
• C) only a short-run tradeoff between inflation and unemployment but not a long-run tradeoff.
• D) no tradeoff in either curve.
• E) a tradeoff in both curves.

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Definitions:

Fixed-Cost Fallacy

Consideration of costs that do not vary with the consequences of your decision (also known as the sunk-cost fallacy).

Depreciation Costs

The allocation of the cost of a tangible asset over its useful life, representing the decline in value due to wear and tear, age, or obsolescence.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or choosing to pursue a particular action.

Accounting Costs

Costs that appear on the financial statements of a company.