If Inflation Were High in Some Country and Lawmakers in That

question 21

Multiple Choice

If inflation were high in some country and lawmakers in that country passed a law requiring the central bank to maintain a low level of inflation,it is likely that

• A)the short-run Phillips curve would shift right and the cost of disinflation would rise.
• B)the short-run Phillips curve would shift right and the cost of disinflation would fall.
• C)the short-run Phillips curve would shift left and the cost of disinflation would rise.
• D)the short-run Phillips curve would shift left and the cost of disinflation would fall.

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Definitions:

Zero-Sum Game

A situation in economics or game theory where one party's gain is precisely balanced by another party's loss.

Dominant Strategy

In game theory, a strategy that is best for a player regardless of the strategies chosen by the other players.

Payoff

The return or profit from an investment or action.

Alternative Option

A different choice or course of action that is available to individuals or organizations.