Assume That Expected Inflation Is Based on the Following: πᵉT

question 11

Multiple Choice

Assume that expected inflation is based on the following: πᵉt = θπt₋₁.If θ = 0,we know that

• A)a reduction in the unemployment rate will have no effect on inflation.
• B)low rates of unemployment will cause steadily increasing rates of inflation.
• C)high rates of unemployment will cause steadily declining rates of inflation.
• D)the Phillips curve illustrates the relationship between the level of inflation rate and the level of the unemployment rate.

---

Definitions:

Major Depressive Disorder

A serious to severe depressive disorder in which the person may show loss of appetite, psychomotor retardation, and impaired reality testing.

Delusional Disorder

A psychiatric condition characterized by persistent delusions, which are false beliefs that conflict with reality, in the absence of other major psychiatric symptoms.

Conversion Disorder

Conversion disorder is a mental condition in which a person experiences neurological symptoms, such as paralysis or blindness, without a physical cause.

Illness Anxiety Disorder

A chronic condition characterized by excessive concern and anxiety about having a serious illness, despite medical reassurance.