If a Central Bank Attempts to Lower the Inflation Rate

question 113

Multiple Choice

If a central bank attempts to lower the inflation rate but the public doesn't believe the inflation rate will fall as far as the central bank says, then in the short run unemployment

• A)rises.As inflation expectations adjust, the short-run Phillips curve shifts right.
• B)rises.As inflation expectations adjust, the short-run Phillips curve shifts left.
• C)falls.As inflation expectations adjust, the short-run Phillips curve shifts right.
• D)falls.As inflation expectations adjust, the short-run Phillips curve shifts left.

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Definitions:

Disposable Income

Net disposable financial resources for households focusing on savings and spending post income tax adjustments.

Disposable Income

The budgetary provision for households for saving and spending after income taxes have been processed.

APS

Acute Psychological Stress, referring to the significant mental stress an individual experiences in response to a perceived threatening situation.

Disposable Income

Financial avenues open to households for spending and saving, post income tax deductions.