To Avoid Accelerating Inflation Over Time, a Government's Policy Should

question 217

Multiple Choice

To avoid accelerating inflation over time, a government's policy should _____ to trade off lower unemployment for higher inflation rather than _____.

• A)try; accept a lower unemployment rate so that the actual inflation rate is less than the expected inflation rate
• B)not try; accept a high enough unemployment rate so that the actual inflation rate matches the expected inflation rate
• C)try; accept a higher unemployment rate so that the actual inflation rate is higher than the expected inflation rate
• D)not try; try to control inflation only by using aggressive disinflationary polices

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Definitions:

Urine Concentration

The process by which the kidneys regulate the electrolyte balance and water content in the body by adjusting the volume and concentration of urine.

Antidiuretic Hormone

A hormone also known as vasopressin that helps control the balance of water in the body by reducing the amount of water excreted in the urine.

Insulin

Pancreatic hormone that encourages uptake of glucose by target cells; lowers level of glucose in the blood.

Unwanted Solutes

Substances dissolved in a fluid (like water) that are not desired, often requiring processes for their removal.