Use the Following to Answer Questions

question 58

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%. Refer to 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 increases the money supply such that aggregate demand shifts to the right and unemployment falls to 4%, then inflation will:

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

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Definitions:

U.S. Army Corps

A federal organization responsible for public engineering, design, and construction management, including improvements to natural resources and infrastructure.

Wetlands

Areas of land designated by government agencies as protected areas that support wildlife and that therefore cannot be filled in or dredged by private parties.

Clean Water Act

United States federal law aimed at reducing pollution and protecting the nation’s waterways.

Discharge of Pollutants

The release of pollutants into the environment, often regulated by laws to prevent harm.