Moving Along the Short-Run Phillips Curve, a ________ Unemployment Rate

question 135

Multiple Choice

Moving along the short-run Phillips curve, a ________ unemployment rate can only be achieved by paying the cost of ________.

• A) lower; a higher inflation rate
• B) lower; a lower inflation rate
• C) lower; a higher expected inflation rate
• D) lower; a lower price level
• E) higher; a higher inflation rate

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Definitions:

Household Debt

The total amount of money that all members of a household owe to outside parties, including mortgages, credit cards, and loans.

Adjustable Rate Mortgages

A type of mortgage loan where the interest rate can change over time based on an index or benchmark.

Sub-Prime Loans

These are loans offered to individuals with poor credit histories or higher risk profiles at higher interest rates than standard loans.

Low Short-Term Interest Rate

A situation where the interest rates for borrowing funds for a short period are significantly lower than usual, typically indicating a policy aimed at stimulating economic growth.