Which of the Following Best Describes the Negative Slope of the Short-Run

question 7

Multiple Choice

Which of the following best describes the negative slope of the short-run Phillips curve?

• A)Weak growth in aggregate demand keeps the economy below potential GDP,so unemployment rises but inflation falls.
• B)Aggregate demand grows so quickly that the inflation rate rises as unemployment rises.
• C)Long-run aggregate supply increases quickly enough that inflation falls as unemployment also falls.
• D)Short-run aggregate supply increases at the same pace as aggregate demand increases so that inflation and unemployment do not change.

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Definitions:

Fair Value

The value likely to be obtained from disposing of an asset or the expense incurred in transferring a liability, within a structured exchange involving market entities at the time of assessment.

Goodwill

An intangible asset that arises when a buyer acquires an existing business, representing the premium paid over the fair value of the identifiable assets and liabilities.

Liabilities Assumed

Obligations that a company takes on as part of a transaction, such as purchasing another company or assets.

Identifiable Assets

Assets that can be separated and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract.