If the Economy Is at the Point Where the Short-Run

question 126

Multiple Choice

If the economy is at the point where the short-run Phillips curve intersects the long-run Phillips curve, what are the values of unemployment and inflation?

• A) Unemployment equals the natural rate, and expected inflation equals actual inflation.
• B) Unemployment is above the natural rate, and expected inflation equals actual inflation.
• C) Unemployment equals the natural rate, and expected inflation is lower than actual inflation.
• D) Unemployment is below the natural rate, and inflation is greater than the expected rate.

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Definitions:

Overemphasis

the act of placing too much importance or stress on a particular aspect or detail, potentially leading to imbalance or distortion of understanding.

Controlling

Exerting influence or authority over others in a manner that might limit their autonomy or freedom of choice.

Disequilibration

A cognitive state of imbalance or confusion that occurs when new information challenges existing schemas or beliefs.

Accommodation

In psychology, the process of adjusting one's cognitive schemas to incorporate new information.