Assume That an Economy Has the Usual Type of Phillips

question 97

Multiple Choice

Assume that an economy has the usual type of Phillips curve except that the natural rate of unemployment in an economy is given by an average of the unemployment rates in the last two years. Then, there is:

• A) a long-run tradeoff between inflation and unemployment.
• B) no long-run tradeoff between inflation and unemployment.
• C) no short-run tradeoff between inflation and unemployment.
• D) a sacrifice ratio that is large but not infinite.

---

Definitions:

Real-world Events

Occurrences or incidents that take place in the actual world as opposed to theoretical or artificial environments.

Plausibility

The quality of seeming reasonable or probable, often used to describe theories, arguments, or scenarios that are believable based on evidence or logic.

Adam Smith

An 18th-century Scottish economist and philosopher, best known for his theories on free market economics presented in "The Wealth of Nations."

Individuals

Single human beings considered separate from a group or society.