If Inflation Expectations Decline,then the Short-Run Phillips Curve Shifts

question 153

Multiple Choice

If inflation expectations decline,then the short-run Phillips curve shifts

• A)left,so that at any inflation rate unemployment is lower in the short run than before.
• B)right,so that at any inflation rate unemployment is lower in the short run than before.
• C)right,so that at any inflation rate unemployment is higher in the short run than before.
• D)left,so that at any inflation rate unemployment is higher in the short run than before.

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Definitions:

Securities

Financial instruments that represent obligations on the part of the issuers to provide the purchasers with expected stated returns on the funds invested or loaned.

Financial Instruments

Contracts and securities that represent a financial value or obligation, such as stocks, bonds, options, and futures.

Bondholders

Investors who own bonds issued by corporations or governments, entitled to receive interest payments and the principal amount upon maturity.

Creditors

Individuals or institutions that lend money or extend credit to others, expecting repayment in the future with possible interest.