Question

In: Economics

If the Phillips curve is usually correct, then an increase in output and a corresponding decrease...

If the Phillips curve is usually correct, then an increase in output and a corresponding decrease in unemployment would be unusual.

Select one:

True

False

The correlation between unemployment and inflation can be explained by upward pressure on wages and prices when unemployment is low.

Select one:

True

False

According to the natural rate hypothesis (Friedman and Phelps), in the long run, monetary growth did not influence those factors that determine the economy’s unemployment rate.

Select one:

True

False

A fiscal policy that reduces the amount of cyclical unemployment would affect the long run Phillips curve but not the short-run Phillips curve.

Select one:

True

False

Many economists during the 1960s believed the implications of the Phillips curve, which offered policymakers a menu of possible economic outcomes from which to choose and the choice for expansionary policy would lead to inflationary pressure but reduced unemployment.

Select one:

True

False

Solutions

Expert Solution

Q- If the Phillips curve is usually correct, then an increase in output and a corresponding decrease in unemployment would be unusual.

Answer- True.

Q- The correlation between unemployment and inflation can be explained by upward pressure on wages and prices when unemployment is low.

Answer- True.

Q- According to the natural rate hypothesis (Friedman and Phelps), in the long run, monetary growth did not influence those factors that determine the economy’s unemployment rate.

Answer- True.

Q- A fiscal policy that reduces the amount of cyclical unemployment would affect the long run Phillips curve but not the short-run Phillips curve.

Answer- False.

Q- Many economists during the 1960s believed the implications of the Phillips curve, which offered policymakers a menu of possible economic outcomes from which to choose and the choice for expansionary policy would lead to inflationary pressure but reduced unemployment.

Answer- True.


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