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Suppose That Businesses and Labour Anticipate the Inflation Rate Will

Question 40

Multiple Choice

Suppose that businesses and labour anticipate the inflation rate will increase and act to protect their interests. This will cause:


A) the Phillips curve to shift toward higher rates of inflation at each unemployment rate.
B) the Phillips curve to shift toward lower rates of inflation at each unemployment rate.
C) no change in the unemployment rate but a higher price level.
D) no change in the actual price level but a higher level of unemployment.

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