Suppose an Economy Experiences a Permanent Increase in Its Expected

question 66

Multiple Choice

Suppose an economy experiences a permanent increase in its expected inflation rate. As a result, there is

• A) a downward shift of the short-run Phillips curve.
• B) a downward movement along the short-run Phillips curve.
• C) no change at all to the short-run Phillips curve.
• D) an upward movement along the short-run Phillips curve.
• E) an upward shift of the short-run Phillips curve.

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Definitions:

Slopes Downward

In economics, describes a line on a graph that decreases in value as it moves from left to right, indicating a negative relationship between two variables.

IRR

Internal Rate of Return; a financial metric used to estimate the profitability of potential investments by calculating the discount rate that makes the net present value of cash flows zero.

Mutually Exclusive

Situations or events that cannot occur at the same time.

Investment Proposals

Detailed written offers to purchase new or existing securities, outlining the terms and conditions for investment.