The view of the Phillips curve that prevailed in the 1960s implied that policies that ?
Correct answer: B. lower unemployment rate will tend to raise the inflation rate
- A. lower unemployment rate will tend to lower the inflation rate
- B. lower unemployment rate will tend to raise the inflation rate
- C. raise inflation rate will tend to raise the unemployment rate
- D. lower inflation rate will tend to raise the unemployment rate
Explanation
The original short-run Phillips curve was interpreted as an inverse relationship: expansionary policies could reduce unemployment but would increase inflation. Thus, lowering unemployment was expected to raise the inflation rate.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
Practise Macroeconomics
1,499 free Macroeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Economics questions like this
Economics is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Macroeconomics questions
The expectations augmented Phillips curve was the Work of which group of economists ?
Even though explicit contracts may lead to layoffs during recessions explicit contracts may still be efficient because such contracts ?
The classical model of macroeconomics assumes ?
The Phillips curve is a graph showing the relationship between ?
Which school of economic thought suggested that one possible cause of inflation was a 'push' from the cost side ?
The measured unemployment rate can be pushed below the natural rate, but ?