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

question 17

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 rational 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:

Lymphatic

Relating to the lymphatic system, which helps rid the body of toxins and is essential for transporting lymph, a fluid containing white blood cells.

Body Temperature

The measure of the body's ability to generate and lose heat, maintained within a narrow range necessary for normal bodily functions.

Integumentary

Pertaining to the coverings of an organism, such as the skin, hair, nails, scales, or feathers, that protect the body from various kinds of damage.