An Increase in the Expected Inflation Rate Will

question 31

Multiple Choice

An increase in the expected inflation rate will:

• A)shift the short-run Phillips curve upward and to the right.
• B)shift the short-run Phillips curve downward and to the left.
• C)not shift the short-run Phillips curve unless the unemployment rate changes.
• D)cause the unemployment rate associated with each inflation rate to decrease.
• E)tend to increase production unless the actual inflation rate also increases.

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Definitions:

Foreign Assets

Assets owned by residents of a country that are located in foreign countries, including stocks, bonds, real estate, and direct investments.

Rising Interest Rates

The phenomenon where central banks increase the cost of borrowing, which can affect consumer spending, investment, and overall economic growth.

U.S. Dollar

The official currency of the United States, commonly used worldwide as a standard for financial transactions.

Foreign Imports

Goods or services brought into a country from abroad for sale.