As the Price Level Rises

question 139

Multiple Choice

As the price level rises,

• A)the exchange rate falls,so net exports fall.
• B)the exchange rate falls,so net exports rise.
• C)the exchange rate rises,so net exports fall.
• D)the exchange rate rises,so net exports rise.

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Definitions:

Natural Rate

Often referred to as the natural rate of unemployment, it is the level of unemployment consistent with a stable inflation rate.

Phillips Curves

The economic theory suggesting an inverse relationship between inflation and unemployment rates over the short-term.

Expected Inflation

The rate of inflation that consumers, businesses, and investors anticipate will occur in the future, which can influence economic behavior in the present.

Phillips Curve

An economic theory that suggests an inverse relationship between the rate of unemployment and the rate of inflation in an economy.