If the Public Correctly Perceives That the Central Bank Will

question 45

Multiple Choice

If the public correctly perceives that the central bank will reduce inflation,then

• A)the short-run Phillips curve shifts right,and unemployment will rise by more than otherwise.
• B)the short-run Phillips curve shifts right,and unemployment will rise by less than otherwise.
• C)the short-run Phillips curve shifts left,and unemployment will rise by more than otherwise.
• D)the short-run Phillips curve shifts left,and unemployment will rise by less than otherwise.

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Definitions:

Taxpayers

Taxpayers are individuals or entities that are required to pay taxes to governmental bodies, based on earned income, property ownership, or other tax liabilities.

Deadweight Loss

A loss of economic efficiency that can occur when equilibrium for a good or a service is not achieved or is not achievable, leading to a misallocation of resources.

Baseball Hat

A type of soft cap with a rounded crown and a stiff bill projecting in front.

Tax

A mandatory financial charge or some other type of levy imposed on a taxpayer by a governmental organization in order to fund government spending and various public expenditures.