The Most Important Factor Determining How Quickly Expected Inflation Adjusts

question 47

Multiple Choice

The most important factor determining how quickly expected inflation adjusts when the government attempts to reduce inflation is

• A)the slope of the Phillips curve.
• B)the credibility of the government's disinflationary policy.
• C)the degree of gradualism in the government's disinflationary policy.
• D)the slope of the IS curve.

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Definitions:

Ozone

A molecule composed of three oxygen atoms, found in the Earth's stratosphere, where it forms a layer that protects life by blocking most of the sun's harmful ultraviolet radiation.

Stratosphere

The second major layer of Earth's atmosphere, just above the troposphere and below the mesosphere, known for containing the ozone layer.

Antarctica

The Earth's southernmost continent, containing the geographic South Pole, known for its extensive ice sheets and cold climate.

Ozone Depletion

The reduction of the ozone layer in the Earth's stratosphere caused by the release of certain chemical compounds, leading to increased ultraviolet radiation reaching the Earth's surface.