If People in a Country That Has Had Persistently High

question 236

Multiple Choice

If people in a country that has had persistently high inflation expect it to remain high and are skeptical of promises the central bank makes, then the Phillips curve is

• A) farther to the left than otherwise. If the central bank tries to reduce inflation unemployment will rise by more than if people had believed its promises.
• B) farther to the left than otherwise. If the central bank tries to reduce inflation unemployment will rise by less than if people had believed its promises.
• C) farther to the right than otherwise. If the central bank tries to reduce inflation unemployment will rise by more than if people had believed its promises
• D) farther to the right than otherwise. If the central bank tries to reduce inflation unemployment will rise by less than if people had believed its promises..

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Definitions:

Fair Value

An estimate of the market value of an asset or liability, based on the current price to sell an asset or settle a liability in an orderly transaction.

Controlling Influence

The power or authority to govern or direct the management and policies of another entity without necessarily having majority ownership.

Voting Stock

Shares that give the shareholder the right to vote on matters of corporate policy and the election of the board of directors.

Equity Changes

Refers to variations in the owners' equity in a business over time due to earned income, distribution of profits, investments, and withdrawals.