Once Economists Take into Consideration Changes in the Expected Inflation

question 57

Multiple Choice

Once economists take into consideration changes in the expected inflation rate and supply shocks,the Phillips curve

• A) only remains useful when explaining the long-run trade-off between unemployment and inflation.
• B) remains a useful tool for explaining the short-run trade-off between unemployment and inflation.
• C) is no longer a useful tool for explaining any trade-off between unemployment and inflation.
• D) accurately explains the short-run and long-run trade-offs between unemployment and inflation.

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Dense

Having a high mass per unit volume; closely compacted in substance.

Arête

A sharp, narrow ridge found in rugged mountains, formed by the erosion of two glaciers side by side.

Depression

In geology, a landform sunk below its surroundings, forming a low area which can be natural or man-made.

Valley

A low area between hills or mountains, typically with a river running through it.