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:

Short Run

A period in economics during which at least one input is fixed and cannot be changed by the company.

Supply Curve

A graphical representation showing the relationship between the price of a good and the amount of the good that producers are willing and able to supply.

Perfectly Competitive Firms

Businesses that operate in a market where prices are dictated by supply and demand, and where no single buyer or seller has market control.

Homogeneous Products

Undifferentiated outputs; products that are identical to or indistinguishable from one another.