A Change in Expected Inflation Shifts

question 76

Multiple Choice

A change in expected inflation shifts

• A)the short-run Phillips curve, but not the long run Phillips curve.
• B)the long-run Phillips curve, but not the long run Phillips curve.
• C)neither the short-run nor the long-run Phillips curve.
• D)both the short-run and long-run Phillips curve right.

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Definitions:

Fiscal Policy

Government policy related to taxation and spending to influence the economy.

Recession

A significant decline in economic activity spread across the economy, lasting more than a few months, visible in GDP, real income, employment, industrial production, and wholesale-retail sales.

Budget Deficit

The situation in which a government's expenditures exceed its revenues, leading to borrowing or currency issuance.

Taxes

Compulsory contributions to state revenue, levied by the government on workers' income and business profits or added to the cost of some goods, services, and transactions.