In Recent Years, Inflation Expectations Have Fallen

question 21

Multiple Choice

In recent years, inflation expectations have fallen. How did this shift the short-run Phillips curve, and what are the implications for unemployment?

• A) This shifted the short-run Phillips curve left, meaning that at any given inflation rate, unemployment will be lower in the short run than before.
• B) This shifted the short-run Phillips curve right, meaning that at any given inflation rate, unemployment will be lower in the short run than before.
• C) This shifted the short-run Phillips curve right, meaning that at any given inflation rate, unemployment will be higher in the short run than before.
• D) This shifted the short-run Phillips curve left, meaning that at any given inflation rate, unemployment will be higher in the short run than before.

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Definitions:

Tapestry

A weaving technique in which the weft threads are packed densely over the warp threads so that the designs are woven directly into the fabric.

Cross-Hatching

A drawing technique used to create shading and texture, consisting of intersecting sets of parallel lines.

Engraving

A printmaking process where designs are incised onto a hard surface, such as metal plates or wood blocks, to produce images on paper.

Woodcut

A printmaking technique that involves carving an image into a wooden surface, which is then inked and pressed onto paper.