Exhibit 17-4 Short-Run and Long-Run Phillips Curves Suppose the Economy

question 106

Multiple Choice

Exhibit 17-4 Short-run and long-run Phillips curves Suppose the economy in Exhibit 17-4 is at point E₁, and the Fed increases the money supply. If people have adaptive expectations, then the economy will move:

• A)to point A in the short run and point B in the long run.
• B)directly to point B.
• C)to point C in the short run and point D in the long run.
• D)directly to point D.

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Definitions:

Revolutionary

A revolutionary is an individual or group that advocates for or participates in a dramatic and significant change, particularly in political, social, or economic structures.

Sick Man of Europe

A derogatory nickname historically used to describe a European country experiencing a period of economic difficulty or poor health, originally referring to the Ottoman Empire in the 19th century.

Ottoman Empire

was a vast and powerful empire founded at the end of the 13th century by Turkish tribes in Anatolia. It lasted until the early 20th century, encompassing parts of Southeast Europe, Western Asia, and North Africa.

Serfs

Laborers who were tied to the land in feudal societies, primarily in medieval Europe, required to provide labor, pay rents, and be subject to the lord's control.