The Traditional Short-Run Phillips Curve Implies That

question 71

Multiple Choice

The traditional short-run Phillips curve implies that

• A) a central bank has no impact on the unemployment rate.
• B) a central bank has no impact on inflation.
• C) a central bank can choose higher or lower unemployment rates simply by adjusting the rate of inflation in an economy.
• D) prices are completely flexible.
• E) unemployment and inflation are unrelated.

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Definitions:

Critical Thinking

Undertaking an impartial investigation and analysis of a topic with the purpose of making an informed decision.

Context of Information

The circumstances, background, or conditions that provide meaning to a piece of information, influencing its interpretation and understanding.

Prestige of Authority

The respect and admiration that an individual commands from others by virtue of their position or status in a hierarchy.

Critical Thinking Skills

The ability to analyze facts, generate and organize ideas, defend opinions, make comparisons, draw inferences, evaluate arguments, and solve problems thoughtfully and systematically.