If the Level of Unemployment Is Above the Natural Rate

question 58

Multiple Choice

If the level of unemployment is above the natural rate of unemployment,it would be expected that:

• A) the short-run Phillips curve will shift leftward, as inflationary expectations adjust.
• B) the inflation rate will increase.
• C) the short-run Phillips curve will shift rightward, as inflationary expectations adjust.
• D) both b. and c.

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Definitions:

Total Risk

The complete spectrum of all types of risk that an investment or project could potentially face, including both systematic and unsystematic risks.

Expected Return

The expected return is the average return expected on an investment over a period.

Securities

Tradable financial instruments intended to provide returns to investors, which include equities, bonds, and options.

Portfolio

A collection of investments held by an individual or an institution, which may include stocks, bonds, and other assets.