The Lack of a Long-Run Tradeoff Between the Unemployment Rate

question 184

Multiple Choice

The lack of a long-run tradeoff between the unemployment rate and the inflation rate means the long-run Phillips curve is

• A) upward sloping.
• B) horizontal.
• C) vertical.
• D) downward sloping.
• E) U-shaped, with higher inflation initially decreasing unemployment and then increasing it back to the natural unemployment rate.

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Definitions:

Demand for Cheerios

The consumer desire and willingness to purchase Cheerios, a popular brand of breakfast cereal, at various price points.

Elastic than Demand

Refers to a situation where the quantity demanded of a good is more sensitive to changes in price, indicating a high price elasticity of demand.

Cereal

A food product made from processed grains, often eaten as breakfast and typically served cold with milk.

Price Elasticity of Demand

A measure of how responsive the quantity demanded of a good is to a change in its price, with higher elasticity indicating greater sensitivity.