Use the Following to Answer Questions

question 27

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 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:

Electrocardiogram

A diagnostic test that measures the electrical activity of the heart to assess its health and functionality.

Electrodes

Conductive materials that allow the flow of electrical current into or out of a medium, used in various electronic devices and medical applications.

Amplifier

An electronic device that increases the power, voltage, or current of a signal.

Somatic Tremor

An involuntary, rhythmic muscle contraction leading to shaking movements in one or more parts of the body.