An Increase in the Expected Inflation Rate Will

question 31

Multiple Choice

An increase in the expected inflation rate will:

• A)shift the short-run Phillips curve upward and to the right.
• B)shift the short-run Phillips curve downward and to the left.
• C)not shift the short-run Phillips curve unless the unemployment rate changes.
• D)cause the unemployment rate associated with each inflation rate to decrease.
• E)tend to increase production unless the actual inflation rate also increases.

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Definitions:

Motivated Reasoning

A cognitive process where individuals form and cling to beliefs despite contrary evidence, driven by emotion or desire rather than objective evaluation.

Evidence

Information or facts that are used to support a conclusion, belief, or proposition.

Beliefs

A conviction or acceptance that something is true or exists.

Early Payment Discount

A reduction in the amount due for goods or services offered by a seller to buyers who pay their bill before a specified date.