Along the Short-Run Phillips Curve, If the Actual Unemployment Rate

question 64

Multiple Choice

Along the short-run Phillips curve, if the actual unemployment rate falls below the natural unemployment rate, the

• A)actual inflation rate will be equal to the expected inflation rate.
• B)actual inflation rate will be greater than the expected inflation rate.
• C)actual inflation rate will be less than the expected inflation rate.
• D)actual inflation rate may be greater than, equal to, or less than the expected inflation rate
• E)expected inflation rate will fall to zero.

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Definitions:

Undistributed Profits

Profits earned by a company that are not paid out as dividends to shareholders but are retained within the company for reinvestment.

Entry Barriers

Obstacles that prevent or hinder new competitors from easily entering an industry or market.

Inverted-U Theory

A hypothesis suggesting that a variable can produce effects that increase to a point after which further increases in the variable lead to a decline in the effect.

Industry Concentration Ratios

Statistical measures that express the extent to which a small number of firms dominate the total output, sales, or capacity in an industry.