The Modern View of the Phillips Curve Indicates That in the Long

question 72

Multiple Choice

The modern view of the Phillips curve indicates that in the long run there

• A) is no trade-off between inflation and unemployment.
• B) is a definite trade-off between unemployment and inflation.
• C) will be a trade-off if the rational expectations hypothesis is correct.
• D) may be a long-run trade-off between unemployment and inflation, but there is no such trade-off in the short run.

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Definitions:

Future Cash Flows

Estimated streams of future financial income or expenditure, related to investments, projects, or business operations.

Rate of Return

A measure of the profitability of an investment, expressed as a percentage of the original investment.

Present Value

The present valuation of money expected in the future or cash inflow sequences, with adjustments for a predetermined rate of return.

Security's Value

The market worth or price at which a financial security, such as a bond or stock, can be bought or sold.