The Natural Rate Hypothesis Concludes That When the Inflation Rate

question 38

Multiple Choice

The natural rate hypothesis concludes that when the inflation rate increases, then, in the short run, there is

• A) an upward shift of the short-run Phillips curve.
• B) a downward shift of the short-run Phillips curve.
• C) an upward movement along the short-run Phillips curve.
• D) a downward movement along the short-run Phillips curve.
• E) no change at all in the short-run Phillips curve.

---

Definitions:

Trustee Account

A type of account managed by a trustee who holds assets for the benefit of another party, ensuring the assets are managed in the beneficiary's best interest.

Short-term Securities

Financial instruments that are typically debt securities with maturities of one year or less, used for short-term financing needs.

Interest Rate Sensitive

Pertaining to assets or investments that are affected by changes in interest rates.

Treasury Bills

Short-term government securities with maturities of one year or less, sold at a discount and redeemed at face value at maturity.