Do the expected inflation rate and natural unemployment rate remain constant along the short-run Phillips curve? Along the short-run Phillips curve, _______. A.the expected inflation rate rises as the natural unemployment rate rises B.the expected inflation rate is constant and the natural unemployment rate varies C.the expected inflation rate and the natural unemployment rate are constant D.the expected inflation rate rises as the natural unemployment rate fallsthankss

Phillips curve is the representation of the rate of unemployment and the inflation on graphical…

Answered: Do the expected inflation rate and…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Do the expected inflation rate and natural unemployment rate remain constant along the short-run Phillips curve?

Along the short-run Phillips curve, _______.

the expected inflation rate rises as the natural unemployment rate rises

the expected inflation rate is constant and the natural unemployment rate varies

the expected inflation rate and the natural unemployment rate are constant

the expected inflation rate rises as the natural unemployment rate falls

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Definition Definition Relationship between the rate of unemployment and the rate of inflation that shows that the lower the initial rate of unemployment, the greater the rise in wage rate corresponding to a given rise in the rate of unemployment. The Phillips curve assumes that the ratio between prices and nominal wage rates is constant in the short run. Presented graphically, the Phillips curve shows an inverse relationship between the rate of unemployment and the rate of inflation.

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