Use the Following to Answer Questions

question 29

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%, inflation of 2%, and an expectation of 2% 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:

Collective Unconscious

A concept in Jungian psychology referring to the part of the unconscious mind which is derived from ancestral memory and experience and is common to all humankind.

Repressed Memories

Memories involuntarily buried because they carry associations with significant stress or trauma.

Unconscious

The part of the mind that is inaccessible to the conscious mind but influences behaviors, thoughts, and feelings.

Universal Concepts

Ideas or understandings that are recognized and applied across different cultures and societies.