If the Actual Inflation Rate Is Equal to the Expected

question 116

Multiple Choice

If the actual inflation rate is equal to the expected rate,which of the following will happen?

• A) inflationary expectations will increase and the Phillips curve will shift downward in the short run.
• B) inflationary expectations will not change and the Phillips curve will remain in its current position in the short run.
• C) inflationary expectations will decrease and the Phillips curve will shift downward in the short run.
• D) inflationary expectations will stay constant and the Phillips curve will shift downward in the short run.
• E) inflationary expectations will not change and the Phillips curve will become horizontal in the short run.

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Definitions:

Unemployment Rate

The percentage of the labor force that is jobless and actively looking for employment.

Prices And Wages

Refers to the relationship and interaction between the cost of goods and services in an economy and the compensation provided to workers, impacting purchasing power and economic conditions.

Money Supply Growth Rate

The rate at which the amount of money available in an economy is increasing over a specific period.

Unemployment

The condition of being without a job despite actively looking for work.