Disinflation Can Be Explained by the Phillips Curve Analysis as Resulting

question 194

Multiple Choice

Disinflation can be explained by the Phillips Curve analysis as resulting from a situation where the actual rate of inflation is initially less than the expected rate, causing the unemployment rate to

• A) rise temporarily. However, consequent decreases in nominal wages will eventually bring the actual and expected rates of inflation into balance.
• B) rise temporarily. However, consequent increases in nominal wages will eventually bring the actual and expected rates of inflation into balance.
• C) fall temporarily. However, consequent increases in nominal wages will eventually bring the actual and expected rates of inflation into balance.
• D) fall temporarily. However, consequent decreases in nominal wages will eventually bring the actual and expected rates of inflation into balance.

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