If the Phillips Curve Represents a "Structural Relationship," Then

question 107

Multiple Choice

If the Phillips curve represents a "structural relationship," then

• A)the trade-off between unemployment and inflation is permanent.
• B)the trade-off between unemployment and inflation holds only for the short run.
• C)the trade-off between unemployment and inflation holds in the long run, but not in the short run.
• D)the Phillips curve will be vertical in the long run.
• E)there will be no trade-off between unemployment and inflation.

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Definitions:

Cost of Capital

The cost of capital represents the minimum return a company needs to achieve to justify the risk of the investment, encompassing the cost of debt and equity.

Mutually Exclusive

Events or choices that cannot occur or be chosen at the same time.

Internal Rate of Return

A metric used in capital budgeting to estimate the profitability of potential investments, calculated as the rate of return that makes the net present value of all cash flows from a particular project zero.

Cost of Capital

The rate of return a business needs to generate in order to meet the demands of its creditors and investors, used in evaluating new projects.