The Vertical Long-Run Phillips Curve

question 101

Multiple Choice

The vertical long-run Phillips curve

• A) shows the Fed's employment options
• B) is vertical because the Fed refuses to change the unemployment rate in the long run
• C) indicates that the Fed cannot affect the unemployment rate in the long run
• D) is fixed permanently
• E) measures recessionary pressures

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Definitions:

Time Value

The idea that money currently in hand is more valuable than the same sum received in the future because of its ability to earn more over time.

Call Option

A financial contract giving the buyer the right, but not the obligation, to purchase a stock or other asset at a specified price within a certain time frame.

Present Value

The current value of a future amount of money or stream of cash flows given a specified rate of return.

Deltas

In options trading, deltas measure the rate of change of the option's price relative to a one-unit change in the price of the underlying asset, indicating how the price of the option is expected to move.