gdp data - 3 Debt deflation is a the effect of deflation in decreasing aggregate demand b an idea proposed by Irving Fisher c a contributing factor in

gdp data - 3 Debt deflation is a the effect of deflation in...

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3. Debt deflation is a. the effect of deflation in decreasing aggregate demand. b. an idea proposed by Irving Fisher. c. a contributing factor in causing the Great Depression. d. due to differences in how borrowers/lenders respond to inflation losses/gains. e. all of the above. Tackle the Test: Free-Response Questions (answer on loose leaf ) 1. Draw a correctly labeled graph showing a short-run Phillips curve with an expected inflation rate of 0% and the corresponding long-run Phillips curve. a. On your graph, label the nonaccelerating inflation rate of unemployment. b. On your graph, show what happens in the long run if the government decides to decrease the unemployment rate below the nonaccelerating inflation rate of unemployment. Explain. 2. Consider the accompanying diagram. a. What is the nominal interest rate if expected inflation is 0%? b. What would the nominal interest rate be if the expected inflation rate were −2%?

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