Figure 17-7 -Refer to Figure 17-7.Consider the Phillips Curves Depicted in the Depicted

question 252

Multiple Choice

Figure 17-7
-Refer to Figure 17-7.Consider the Phillips curves depicted in the graph above.The Fed announces its intention to decrease inflation from 10 percent to 5 percent per year,and it succeeds.If the assumptions of the rational expectations school hold true,and the Fed's announcement is credible,the rate of unemployment will be ________ in the short run.

• A)less than 5.5 percent
• B)5.5 percent
• C)between 5.5 and 7.5 percent
• D)7.5 percent

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Definitions:

Return on Total Assets

A financial ratio that measures the efficiency of a company's use of its assets in generating profit, calculated as net income divided by total assets.

Price-earnings Ratio

A metric used in finance to compare a firm's present stock price with its earnings for each share.

Dividend Payout Ratio

A financial ratio that shows the percentage of a company's earnings paid out to shareholders as dividends.

Gross Margin Percentage

A profitability metric that measures how much of each dollar of revenue is left after deducting the costs of goods sold.