Stagflation Implies That

question 55

Multiple Choice

Stagflation implies that

• A) a tradeoff between inflation and unemployment may not always exist.
• B) policymakers can choose to have less unemployment if they are willing to accept a higher rate of inflation.
• C) the short-run Phillips curve is stable.
• D) the short-run Phillips curve is vertical.

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Definitions:

Projects

Planned sets of interrelated tasks to be executed over a fixed period and within certain cost and other limitations.

Effective Annual Rate

An interest rate expressed as if it were compounded once per year, showing the full amount of interest an investment earns annually.

Annual Nominal Rate

The interest rate stated on a loan or investment agreement, not adjusted for inflation or the compounding of interest.

Investment Opportunities

Potential placements of capital in projects or assets that could yield financial returns in the future.