Which of the Following Explains Why the Original Phillips Curve

question 44

Multiple Choice

Which of the following explains why the original Phillips curve relation disappeared or,as some economists have remarked,"broke down" in the 1970s?

• A)Individuals assumed the expected price level for the current year would be equal to the actual price level from the previous year.
• B)Individuals assumed that expected inflation would be zero
• C)Individuals changed the way they formed expectations of inflation.
• D)Monetary policy became contractionary.
• E) More labor contracts became indexed to changes in inflation.

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Definitions:

Paranoia

A mental condition characterized by delusions of persecution, unwarranted jealousy, or exaggerated self-importance, often elaborated into an organized system.

Amygdala

A section of the brain's limbic system involved in processing emotions, including fear, pleasure, and anger.

Genetic Predisposition

An inherited tendency or increased likelihood to develop a particular trait or disease based on one's genetics.

Schizophrenia

A mental disorder characterized by distortions in thinking, perception, emotions, language, sense of self, and behavior.