Use the Following to Answer Questions

question 236

Multiple Choice

Use the following to answer questions :
Figure: Expected Inflation and the Short-Run Phillips Curve
SRPC₀ is the Phillips curve with an expected inflation rate of zero; SRPC₂ is the Phillips curve with an expected inflation rate of 2%.
-(Figure: Expected Inflation and the Short-Run Phillips Curve) Look at the figure Expected Inflation and the Short-Run Phillips Curve. Suppose that this economy has an unemployment rate of 6%, no inflation, and no expectation of inflation. If the central bank decreases the money supply such that aggregate demand shifts to the left and unemployment rises to 8%, then inflation will:

• A)fall to -2%.
• B)not change.
• C)rise to 2%.
• D)rise to 4%.

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Definitions:

Exhaustion Stage

The final stage of the stress response, characterized by depleted resources and decreased ability to cope with stress.

General Adaptation Syndrome

A theoretical model describing the body's short-term and long-term reactions to stress, consisting of three stages: alarm, resistance, and exhaustion.

Cognitive Impact

The effect of various factors on cognitive processes, such as perception, memory, and reasoning, influencing how we think and understand the world.

Stress

A physical or psychological response to internal or external pressures, challenging the individual's ability to cope.