The Figure Given Below Represents the Short Run and Long

question 30

Multiple Choice

The figure given below represents the short run and long run Phillips curve.
Figure 14.4

-Refer to Figure 14.4. If the adaptive expectations hypothesis holds, and the economy moves from point C to point D because of expansionary fiscal policy, what rate of inflation are people expecting at point D?

• A) 2 percent
• B) 4 percent
• C) 6 percent
• D) 8 percent
• E) 10 percent

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Definitions:

Debtor

An individual or organization that owes money or debt to another entity.

Default

A failure to fulfill a legal obligation, especially to repay a loan or appear in a court of law.

Lien

A legal right or claim against a property, typically used as security for a debt or obligation.

Construction Company

A business entity engaged in the construction of buildings, infrastructure, and other physical structures.