Given the Accelerationist Phillips Curve Δπ = - 0

question 62

Multiple Choice

Given the accelerationist Phillips curve Δπ = - 0.7 (U - 5) + ρ,suppose that inflation has increased from 8 percent to 10 percent.If the unemployment rate is 4 percent,then the price shock is ________.

• A)2.7 percent
• B)0.6 percent
• C)1.3 percent
• D)1 percent
• E)none of the above

---

Definitions:

Discount Rate

The discount rate is the interest rate used in calculating the present value of future cash flows, often reflecting the risk and time value of money in investment appraisals.

Interest Expense

The cost incurred by an entity for borrowed funds over a period, typically represented as an annual percentage.

Operating Expense

Expenses incurred in the normal operation of a business, excluding the cost of goods sold, such as rent, salaries, and utilities.

Income Statement

A financial report summarizing the revenues, costs, and expenses incurred during a specific period, typically a fiscal quarter or year.