Incorporation of expectations into economic decision making indicates that in the long run:
a. inflation relates directly to unemployment.
b. inflation is inversely related to unemployment.
c. the Phillips curve is vertical at the natural rate of unemployment.
d. high unemployment is a primary cause of inflation.
Question 2
Suppose a market basket of goods and services costs 400 in the base year and the consumer price index (CPI) is currently 125 . This indicates the price of the market basket of goods is now:
a. 275.
b. 425.
c. 500.
d. 525.
