If the Natural Unemployment Rate Increases, the Long-Run Phillips Curve

question 89

Multiple Choice

If the natural unemployment rate increases, the long-run Phillips curve ________, the short-run Phillips curve ________, and the expected inflation rate ________.

• A)does not shift; does not shift; does not change
• B)shifts rightward; shifts rightward; does not change
• C)does not shift; shifts rightward; rises
• D)shifts rightward; curve does not shift; falls
• E)shifts rightward; shifts rightward; falls

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Definitions:

Security Market Line

A line graph that represents the relationship between risk (beta) and the expected return of the market and various securities.