The short-run Phillips curve and the long-run Phillips curve are different because
A. the expected rate of inflation is always zero in the short run, while it is a positive number in the long run.
B. the actual and expected rate of inflation are equal in the short run.
C. the expected rate of inflation is always zero in the long run, while it is a positive number in the short run.
D. the actual and expected rate of inflation are equal in the long run.
Answer: D
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What will be an ideal response?
To answer the next question use the information in the table below which illustrates the multiplier process resulting from an autonomous increase in investment by $5. Change in IncomeChange in ConsumptionChange in SavingsAssumed increase in investment$5.00 $1.25Second round $2.81 All other rounds 8.44 Totals 5.00The total change in income resulting from the initial change in investment will be
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