According to the accelerationist Phillips curve, ________. A) ...

[bobbysung]

According to the accelerationist Phillips curve, ________.
 
  A) expectations adjust continually to the latest information
  B) increases in inflation cause the unemployment gap to widen
  C) inflation will change so long as an unemployment gap persists
  D) all of the above
  E) none of the above

Question 2

How can improvements in statistical analysis of financial data cause the amount of information in financial markets to decline?
 
  What will be an ideal response?

[bobsmith]

Answer to Question 1

C

Answer to Question 2

Statistical analysis is a process of drawing inferences from (preferably) large sets of data. When it is possible to predict outcomes such as the overall default rate within a pool of loans, constructing such pools is cheaper and more profitable than attempting to analyze and manage each loan individually. Quantitative scores and rough categorizations replace detailed and largely qualitative dossier for each borrower. Since ownership of the loan assets is both aggregated and dispersed, no one has incentive nor ability to monitor the behavior of borrowers. Lenders receive less information about borrowers, and less information about their fellow lenders.

[bobbysung]

Thank you

[bobsmith]

Happy to help you