A Vertical Long-Run Phillips Curve

question 32

Multiple Choice

A vertical long-run Phillips curve:

• A) is based on the classical theory of invisible hands
• B) is consistent with money non-neutrality
• C) implies that inflation and unemployment are independent of each other in the long run
• D) none of the above
• E) all of the above

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Definitions:

Explicit Costs

Direct, out-of-pocket payments for inputs or resources used by a business, easily identifiable and recorded.

Entrepreneurial Talent

The unique set of skills, insight, and intuition possessed by individuals that enables them to identify and exploit new business opportunities.

Forgone Interest

The potential interest income lost when capital is invested in one project instead of being deposited in a savings account or invested in an alternative project.

Total Revenues

The complete amount of income generated by a business from its sales or services before any expenses are subtracted.