In Recent Years, Inflation Expectations Have Fallen

question 21

Multiple Choice

In recent years, inflation expectations have fallen. How did this shift the short-run Phillips curve, and what are the implications for unemployment?

• A) This shifted the short-run Phillips curve left, meaning that at any given inflation rate, unemployment will be lower in the short run than before.
• B) This shifted the short-run Phillips curve right, meaning that at any given inflation rate, unemployment will be lower in the short run than before.
• C) This shifted the short-run Phillips curve right, meaning that at any given inflation rate, unemployment will be higher in the short run than before.
• D) This shifted the short-run Phillips curve left, meaning that at any given inflation rate, unemployment will be higher in the short run than before.

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Definitions:

Electroencephalogram

A test that measures and records the electrical activity of the brain using small, flat metal discs attached to the scalp.

Oscilloscope

Specialized device that serves as a sensitive voltmeter, registering changes in voltage over time.

Neocortex

Most recently expanded outer layer (“new bark”) of the forebrain, composed of about six layers of gray matter. Its name is a misnomer, as it actually isn’t newer because it arose at the same time during evolution as other forms of cortex. It is also called isocortex because it is almost always six-layered, with few exceptions.

Fritsch and Hitzig

Fritsch and Hitzig were pioneering neuroscientists known for their research demonstrating the electrical excitability of the cerebral cortex.