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:

Involuntary Conversion

Involuntary conversion is the process whereby property is destroyed, stolen, condemned, or disposed of under the threat of condemnation, and the owner receives compensation or insurance recovery.

Reinvested

The act of using dividends, interest, or profits from an investment to purchase additional shares or units of that investment.

Installment Method

The installment method is a tax provision allowing taxpayers to spread out income recognition over several years when reporting sales or transfers of property, helping to manage tax liability.

Depreciation Recapture

A tax provision where depreciation taken on an asset is taxed as ordinary income when the asset is sold.