1. Expectations of inflation are assumed to be constant at each point on a given
ID: 1176794 • Letter: 1
Question
1. Expectations of inflation are assumed to be constant at each point on a given short-run Phillips curve. Answer: True False 2.After some debate, the Fed has adopted an: Choose one answer. a. explicit inflation target above 2.5 percent. b. implicit inflation target above 2.5 percent. c. explicit inflation target below 2.5 percent. d. implicit inflation target below 2.5 percent. 3.In 2007, the U.S. economy was operating close to potential. The budget deficits experienced by the U.S. in 2007 was: Choose one answer. a. primarily passive deficits. b. primarily structural deficits. c. neither structural nor passive deficits. d. about evenly split between structural and passive deficits.Explanation / Answer
1.)False
Along the long-run Phillips cure, expected inflation equals actual inflation.
2.)c. explicit inflation target below 2.5 percent.
3.)c. neither structural nor passive deficits.
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