A change in the misery index
A)may indicate a change in the chances of an incumbent to get re-elected
B)may arise from a change in the inflation rate even if unemployment remains constant
C)is likely to occur if the economy experiences a positive supply shock
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

The misery index is calculated as the sum of the inflation rate and the unemployment rate. Therefore, any change in either of these variables (inflation or unemployment) can lead to a change in the misery index. This could also affect the incumbent's re-election chances as voters tend to be sensitive to economic conditions. A positive supply shock could also lead to changes in the inflation and/or unemployment rate, which would impact the misery index. Therefore, all three choices are correct.

A Change in the Misery Index