A Decrease in Expected Inflation Will

question 253

Multiple Choice

A decrease in expected inflation will

• A)reduce real wages.
• B)increase the natural rate of unemployment.
• C)shift the long-run Phillips curve to the left.
• D)shift the short-run Phillips curve to the left.

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Definitions:

Monopolistically Competitive

In a monopolistically competitive market, many firms sell products that are similar but not identical, allowing for product differentiation and some degree of market power over prices.

Short Run

A period in economic analysis in which at least one input is fixed while others are variable.

Long Run

the period in which all factors of production and costs are variable, allowing for all possible adjustments, including the adoption of new technology.

Short-run Equilibrium

A condition in which demand and supply are equal in a particular market or industry, but only for a temporary period due to fixed factors in the short term.