According to Milton Friedman,the Reason There Are Two Phillips Curves

question 38

Multiple Choice

According to Milton Friedman,the reason there are two Phillips curves is because

• A) the expected inflation rate is always higher than the actual inflation rate.
• B) wages are inflexible.
• C) prices are inflexible.
• D) the expected inflation rate does not instantaneously adjust to changes in the actual inflation rate.
• E) the expected inflation rate is equal to 1 minus the actual inflation rate.

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Definitions:

Liquidity Risk Premium

The additional return demanded by investors for holding assets that are not easily convertible into cash without a significant loss in value.

Savings Equals Investment

A principle in macroeconomics indicating that within an economy, total savings in a period must equal total investments.

Economic Principle

A fundamental concept or guiding theory that forms the basis of economic analysis and decision-making.

Bond Price Changes

Variations in the market price of bonds, influenced by interest rate movements and other factors.