Which of the Following Does the Long-Run Phillips Curve Tell

question 18

Multiple Choice

Which of the following does the long-run Phillips curve tell us?

• A) That the Fed can select any rate of unemployment it wants in the long run
• B) That the Fed can select any rate of inflation and unemployment rate it wants in the long run
• C) That the Fed can select neither the rate of inflation nor the rate of unemployment in the long run
• D) That there is a tradeoff between the rate of inflation and the rate of unemployment in the long run
• E) That the Fed can select any rate of inflation it wants in the long run

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Definitions:

Economic Profit

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs.

TC

Total Cost, which is the total expense incurred in reaching a particular level of output.

Profit-Maximizing

The act of adjusting production and sales to achieve the highest possible profit under given market conditions.

Demand

The quantity of a product or service that consumers are willing and able to purchase at a given price.