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Even If Expectations of Inflation Are Rational,sluggish Adjustment of Wages

question 73

True/False

Even if expectations of inflation are rational,sluggish adjustment of wages and prices will still create a short-run trade-off between inflation and unemployment.


Definitions:

Arousal Theory

The theory that optimal performance and psychological arousal are related in a way that differs as a function of the individual and the task.

Yerkes-Dodson Law

A theory suggesting there is an optimal level of arousal for performance, and that too little or too much arousal can negatively affect performance.

Arousal

A physiological and psychological state of being awake or reactive to stimuli, involving changes in heart rate, brain activity, and energy levels.

Performance

The action or process of carrying out or accomplishing an action, task, or function.

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