If the Economy Is at the Point Where the Short-Run

question 126

Multiple Choice

If the economy is at the point where the short-run Phillips curve intersects the long-run Phillips curve, what are the values of unemployment and inflation?

• A) Unemployment equals the natural rate, and expected inflation equals actual inflation.
• B) Unemployment is above the natural rate, and expected inflation equals actual inflation.
• C) Unemployment equals the natural rate, and expected inflation is lower than actual inflation.
• D) Unemployment is below the natural rate, and inflation is greater than the expected rate.

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Definitions:

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