If the Short-Run Phillips Curves Are Nonlinear,with Each Phillips Curve

question 92

Multiple Choice

If the short-run Phillips curves are nonlinear,with each Phillips curve flatter in the negative inflation range
I: maintaining zero inflation on average forces the average unemployment rate to exceed the natural rate;
II: forcing the unemployment rate to equal the natural rate must result in ever-accelerating inflation.

• A) I is true; II is not.
• B) II is true; I is not.
• C) Both I and II are true.
• D) Neither I nor II is true.

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Definitions:

Intercompany Sale

Transactions of goods or services between subsidiaries within the same parent company.

Bond Discount

The amount by which the market price of a bond is lower than its principal amount due at maturity.

Equity Method

An accounting technique used to record an investor's proportional ownership in a company by recognizing income and increases in investment for the investor's share of the investee's profits.

Acquisition Differential

The disparity between what was paid to acquire a company and the fair market value of its recognizable net assets.