If Inflation Expectations Change as a Result of an Expansionary

question 16

Multiple Choice

If inflation expectations change as a result of an expansionary fiscal policy, this causes

• A) the long-run Phillips curve to shift.
• B) the short-run Phillips curve to shift.
• C) the short-run Phillips curve to remain constant.
• D) a movement along the short-run Phillips curve.

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Definitions:

Psychoanalytic Theorist

An individual specializing in psychoanalytic theory, which focuses on the unconscious mind and childhood experiences in shaping personality and behavior.

Sigmund Freud

The founding father of psychoanalysis, a method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Catharsis

The process of releasing, and thereby providing relief from, strong or repressed emotions, often through art, drama, or other forms of expression.

Emotional Release

The process of letting go of pent-up emotions, which can contribute to a sense of relief or catharsis.