Figure 135 Alt Text for Figure 13

question 223

Multiple Choice

Figure 13.5 Alt text for Figure 13.5: In figure 13.5, a graph shows the short-run and long-run Phillips curves.
Long description for Figure 13.5: The x-axis is labelled, unemployment rate percent.The y-axis is labelled, inflation rate percent per year.A straight line labelled, short-run Philips Curve, begins at the top left corner and slopes down to the end of the x-axis.A straight line labelled, long-run Philips Curve is perpendicular to the x-axis, and begins from the x-axis value 5.5%.Long-run Philips Curve intersects the short-run Philips Curve at point (5.5%, 10%) .A point (7.5, 5) is plotted near the right end of the short-run Philips Curve.The points are connected to their respective coordinates on the x and y-axes with dotted lines.
-Refer to Figure 13.5.Consider the Phillips curves shown in the above graph.We can conclude from this graph that

• A)the natural rate of unemployment in this economy is 5.5 percent.
• B)the expected rate of inflation in this economy is 10 percent.
• C)ceteris paribus, a fall in the rate of inflation to 5 percent will increase unemployment to 7.5 percent in the short run.
• D)All of the above are correct.

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Definitions:

1952

The year 1952, significant for various historical events including the U.S. presidential election where Dwight D. Eisenhower was elected President.

Quota System

A method for controlling immigration or trade by allocating specific limits to certain groups or countries.

Immigrants

People who move to a country other than their native one to live, often in search of better living conditions, employment, or to escape conflict.

Freedom

The power or right to act, speak, or think as one wants without hindrance or restraint.