Practice Questions
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What does the Phillips Curve illustrate about the relationship between inflation and unemployment?
The Phillips Curve shows that when prices go up, businesses often hire more people. Other options are incorrect because This idea suggests that rising...
How does an increase in the unemployment rate generally affect cost-push inflation according to the Phillips Curve dynamics?
When more people are unemployed, there is less competition for jobs. Other options are incorrect because Some might think that higher unemployment mea...
How does an increase in aggregate demand affect the short-run Phillips Curve, assuming no changes in inflation expectations?
When aggregate demand goes up, it leads to more spending and higher output. Other options are incorrect because Some might think that higher demand sh...
How does the long-run Phillips Curve illustrate the relationship between inflation and unemployment in the context of monetary policy and aggregate supply?
In the long run, there is no trade-off between inflation and unemployment. Other options are incorrect because Some might think there is a stable trad...
How does the concept of rational expectations influence the trade-offs illustrated by the Phillips Curve, particularly in the context of demand-pull inflation?
People change their ideas about inflation based on what they see happening. Other options are incorrect because This idea suggests that inflation and ...
What does the Phillips Curve illustrate about the relationship between inflation and unemployment?
The Phillips Curve shows that when prices go up, more people can find jobs. Other options are incorrect because This idea suggests that rising prices ...
What does the Phillips Curve illustrate about the relationship between inflation and unemployment?
The Phillips Curve shows that when prices go up, businesses often hire more people. Other options are incorrect because This idea suggests that when m...
What does the Phillips Curve illustrate about the relationship between the unemployment rate and inflation?
The Phillips Curve shows that when more people are unemployed, prices tend to rise more slowly. Other options are incorrect because This option sugges...
A government decides to increase personal income taxes to reduce the budget deficit. In the short run, what is the likely effect on the Phillips Curve, and how might this impact inflation and unemployment rates?
When taxes go up, people have less money to spend. Other options are incorrect because Some might think that raising taxes will create more jobs; It's...
If the relationship between inflation and unemployment is like a seesaw, where one side goes up as the other goes down, then the impact of increased personal income taxes on the economy can be compared to what effect on the seesaw? A: Decreasing consumption leading to higher unemployment :: B: Increasing investment leading to lower inflation :: C: Maintaining constant demand leading to stable inflation :: D: Increasing government spending leading to lower unemployment
When personal income taxes go up, people have less money to spend. Other options are incorrect because This answer suggests that higher taxes would en...
How would an increase in personal income taxes likely affect the Phillips Curve in a recession?
When personal income taxes go up, people have less money to spend. Other options are incorrect because Some might think higher taxes cause more inflat...
The Phillips Curve illustrates an inverse relationship between inflation and _____ rates, highlighting how fiscal policy changes can shift this curve.
The Phillips Curve shows that when inflation goes up, unemployment tends to go down. Other options are incorrect because Some might think inflation af...
If a government increases personal income taxes, what is the most likely immediate effect on the economy according to the Phillips Curve dynamics?
When taxes go up, people have less money to spend. Other options are incorrect because Some might think that higher taxes mean people will spend more;...
In the context of the Phillips Curve dynamics, arrange the following steps in the correct order of how increasing personal income taxes affects inflation and unemployment: A) Decrease in disposable income, B) Shift of the aggregate demand curve leftward, C) Increase in unemployment, D) Decrease in inflation.
When personal income taxes go up, people have less money to spend. Other options are incorrect because This option suggests that the demand curve shif...
Given the recent increase in personal income taxes, which of the following effects on the Phillips Curve dynamics illustrates the most accurate understanding of the resulting economic conditions?
When personal income taxes go up, people have less money to spend. Other options are incorrect because This option suggests that higher taxes lead to ...
How does an increase in personal income taxes generally affect the short-run Phillips Curve?
When personal income taxes go up, people have less money to spend. Other options are incorrect because This option suggests that higher taxes would lo...
Which of the following statements accurately describe the implications of the Phillips Curve dynamics in the context of fiscal policy changes? Select all that apply.
Other options are incorrect because Higher taxes usually mean people have less money to spend; When demand decreases, it usually causes higher unemplo...
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