If the Reserve Bank Raises the Inflation Rate and Initially

question 126

Multiple Choice

If the Reserve Bank raises the inflation rate and initially expected inflation does not change,in the short run the unemployment rate ________ the natural unemployment rate,and in the long run the unemployment rate ________ the natural unemployment rate.

• A)is larger than;is larger than
• B)is less than;equals
• C)is less than;is less than
• D)is larger than;equals
• E)is less than;is larger than

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Definitions:

Rational Choice Theory

A framework used in social sciences that suggests individuals always make prudent and logical decisions that provide them with the highest amount of personal utility.

Marxism

A socio-political and economic ideology based on the works of Karl Marx, which critiques capitalism and advocates for a classless society through the proletariat's revolt.

Life Chances

The opportunities individual has for achieving economic prosperity, based on various socio-economic factors, including class background and access to education.

Commodity Markets

Markets where raw or primary products are exchanged, typically involving the trading of goods like grains, gold, meat, oil, and natural resources.