Multiple Choice
The price level in the economy between 2010 and 2011 rose from 100 to 110.Between 2011 and 2012,the price level rose from 110 to 121.How does the short-run Phillips curve predict the unemployment rate will change as a result?
A) The unemployment rate will decrease since inflation decreased.
B) The unemployment rate will decrease since inflation increased.
C) The unemployment rate will increase since inflation increased.
D) The unemployment rate will not change since there is no change in the rate of inflation.
Correct Answer:
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