Practice Questions
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How does the Phillips Curve relate to monetary policy in an economy?
The Phillips Curve shows that when inflation goes up, unemployment tends to go down. Other options are incorrect because This answer confuses governme...
How does the Phillips Curve inform economic policymakers about the trade-off between inflation and unemployment during the implementation of monetary policy?
The Phillips Curve shows that when inflation goes up, unemployment can go down in the short run. Other options are incorrect because This option sugge...
How does cost-push inflation affect the Phillips Curve relationship between inflation and unemployment?
Cost-push inflation happens when prices rise due to increased costs for businesses. Other options are incorrect because Some might think that higher c...
Which of the following statements best describes the relationship between unemployment and inflation according to the Phillips Curve in the context of New Keynesian economics?
The Phillips Curve shows that when more people have jobs, prices tend to rise. Other options are incorrect because This option suggests that high unem...
How did historical context influence the interpretation of the Phillips Curve during periods of cost-push inflation?
During cost-push inflation, both prices and unemployment can rise together. Other options are incorrect because Some people think there's always a cle...
What does the Phillips Curve illustrate the relationship between?
The Phillips Curve shows that when inflation goes up, unemployment tends to go down. Other options are incorrect because Some might think GDP, which m...
What does the Phillips Curve primarily illustrate about the relationship between inflation and unemployment?
The Phillips Curve shows that when inflation goes up, unemployment usually goes down. Other options are incorrect because Some might think inflation a...
What does the Phillips Curve illustrate about the relationship between unemployment and inflation?
The Phillips Curve shows that when fewer people are unemployed, prices tend to rise faster. Other options are incorrect because This option suggests t...
Which of the following statements accurately reflect the implications of the Phillips Curve in macroeconomic policy? Select all that apply.
Other options are incorrect because This statement suggests that more demand always lowers unemployment; The idea here is that unemployment doesn't af...
If inflation rises significantly while unemployment remains low, what underlying economic mechanism is most likely causing this situation according to the Phillips Curve?
When demand for goods and services goes up, prices tend to rise. Other options are incorrect because This option suggests that supply issues cause pri...
How would an increase in aggregate demand affect the Phillips curve in the short run?
When people want to buy more goods and services, businesses hire more workers. Other options are incorrect because This option suggests that more dema...
In the context of the Phillips Curve, a decrease in unemployment is typically associated with an increase in ________.
When more people have jobs, they spend more money. Other options are incorrect because Some might think that lower unemployment means higher interest ...
Arrange the following steps in the correct order to illustrate how a shift in aggregate demand affects the Phillips Curve relationship between inflation and unemployment: A) Increased aggregate demand leads to higher output and employment, B) The economy reaches full employment, C) Higher employment leads to upward pressure on wages, D) Inflation rises due to increased demand for goods and services.
When demand increases, businesses produce more, leading to more jobs. Other options are incorrect because This suggests that higher wages happen befor...
Which of the following scenarios best illustrates the relationship described by the Phillips Curve?
The Phillips Curve shows that when unemployment goes down, inflation often goes up. Other options are incorrect because This option suggests that lowe...
A government decides to increase public spending significantly to stimulate the economy. Based on the Phillips Curve, what is the most likely outcome in the short term regarding inflation and unemployment in this scenario?
When the government spends more, it creates jobs. Other options are incorrect because This option suggests that spending less leads to more jobs, whic...
If a government implements policies to reduce inflation, what is the likely short-term effect on unemployment according to the Phillips curve?
When a government tries to lower inflation, it often slows down the economy. Other options are incorrect because Some might think that lowering inflat...
Inflation : Unemployment :: Economic Growth : ?
When the economy grows, more jobs are created. Other options are incorrect because Some might think that economic growth directly affects interest rat...
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