ECON1040 Chapter 17

Which of the following statements is correct? a) in the short run, the unemployment and inflation are positively related. In the long run they are largely unrelated problems b) inflation and unemployment are positively related in the short run and in the long run c) in the short run, unemployment and inflation are negatively related. In the long run they are largely unrelated problems d) inflation and unemployment are negatively related in the short run and in the long run

c

According to the Phillips curve, policymakers would reduce inflation but raise unemployment if they

decreased the money supply

In the long run,

inflation depends primarily upon the money supply growth rate

According to Phillips curve, policymakers could reduce both inflation and unemployment by a) increasing the money supply b) increasing government expenditures c) raising taxes d) none of the above is correct

none of the above is correct

The short run relationship between inflation and unemployment is often called

the phillips curve

When monetary and fiscal policymakers expand aggregate demand, which of the following costs is incurred in the short run?

the price level increases more rapidly

The short run Phillips curve shows the combinations of

unemployment and inflation that arise in the short run as aggregate demand shifts in the economy along the short run aggregate supply curve