#1
What does the Phillips Curve describe?
The relationship between inflation and unemployment
The relationship between interest rates and investment
The relationship between government spending and GDP
The relationship between wages and productivity
#2
In the short run, according to the Phillips Curve theory, what typically happens when unemployment decreases?
Inflation increases
Inflation decreases
Interest rates increase
Interest rates decrease
#3
What is the main criticism of the Phillips Curve?
It does not account for supply-side shocks
It assumes a constant level of inflation
It only applies to closed economies
It does not consider government policies
#4
According to the expectations-augmented Phillips Curve, what happens when workers and firms adjust their expectations of inflation?
The short-run Phillips Curve shifts downward
The short-run Phillips Curve shifts upward
The short-run Phillips Curve becomes steeper
The short-run Phillips Curve becomes flatter
#5
What is the long-term implication of a country consistently operating below its potential GDP?
Increased inflation
Decreased inflation
Increased unemployment
Decreased unemployment
#6
Which policy instrument is primarily used to counteract high inflation?
Expansionary monetary policy
Contractionary monetary policy
Expansionary fiscal policy
Contractionary fiscal policy
#7
What is the primary assumption behind the Phillips Curve theory?
Stable economic conditions
Constant level of inflation
Fixed exchange rates
Perfect competition
#8
Which economist is credited with introducing the concept of the Phillips Curve?
Milton Friedman
John Maynard Keynes
Alfred Marshall
A.W. Phillips
#9
According to the natural rate hypothesis, what happens in the long run when unemployment falls below the natural rate?
Inflation decreases
Inflation increases
Wages decrease
Wages increase
#10
What is the term used to describe the situation when policymakers face a trade-off between inflation and unemployment in the short run?
Stagflation
Hyperinflation
Deflation
Disinflation
#11
Which of the following best describes the relationship between the Phillips Curve and the concept of potential output?
Potential output is the point where the Phillips Curve intersects with zero inflation
Potential output is the level of output where the Phillips Curve intersects with the natural rate of unemployment
Potential output is the level of output where the Phillips Curve becomes vertical
Potential output is irrelevant to the Phillips Curve
#12
What is the main factor that could cause the Phillips Curve to shift to the right?
An increase in aggregate demand
A decrease in aggregate demand
An increase in aggregate supply
A decrease in aggregate supply