The Short-Run Phillips Curve Shows Only a Short-Run Tradeoff Between

question 112

Multiple Choice

The short-run Phillips curve shows only a short-run tradeoff between the unemployment rate and the inflation rate because in the long run the

• A) natural unemployment rate increases.
• B) expected inflation rate increases.
• C) unemployment rate returns to the natural unemployment rate and so there is no long-run tradeoff between the inflation rate and the unemployment rate.
• D) inflation rate returns to the natural inflation rate and so there is no long-run tradeoff between the inflation rate and the unemployment rate.
• E) inflation rate returns to the natural inflation rate and the unemployment rate returns to the natural unemployment rate.

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Definitions:

Tariffs

Taxes imposed on imported goods, often intended to protect domestic industries from foreign competition.

Agricultural Imports

Goods brought into a country that are products of agriculture, such as grains, fruits, and vegetables, which can affect the domestic agricultural market.

Political Logrolling

Engaging in the mutual exchange of support, especially within politics, by voting for each other's legislative proposals.

Special-Interest Effect

The impact upon policy or decision-making driven by a small, motivated group seeking to further their own interests.