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Suppose That the Expected Inflation Rate Is 12 Percent and the Unemployment

Question 266

Multiple Choice

Suppose that the expected inflation rate is 12 percent and the unemployment rate is 5 percent. If the expected inflation rate increases to 13 percent, then


A) the short-run Phillips curve will shift upward.
B) the short-run Phillips curve will shift downward.
C) there will be a movement along the short-run Phillips curve.
D) the natural unemployment rate will rise.

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