Use the Following to Answer Questions

question 145

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%, inflation of 2%, and an expectation of 2% future 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 zero.
• B)not change.
• C)rise to 2%.
• D)rise to 4%.

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Definitions:

Sedimentary Unit

A layer of sedimentary rock with distinguishable characteristics that set it apart as a visually identifiable segment of a stratigraphic sequence.

Pluton

A body of intrusive igneous rock that solidified below the surface of the earth.

Shear Zone

A region of the Earth's crust where rocks have been deformed by shear stress, leading to the alteration of their structure and the development of foliation.

Supercontinent

A large landmass that includes more than one continental core, which in Earth's history has periodically merged and then broken apart.