A graph showing the inverse relationship between the economy's rate of unemployment and rate of inflation is called the:
a. Laffer curve.
b. aggregate expenditure model.
c. Keynesian cross.
d. Phillips curve.
e. consumption curve.
QUESTION 2Suppose that the consumer price index (CPI) was 160 in Year X and 166 in Year Y, inflation during Year Y was approximately:
a. zero; prices were stable.
b. 3.8 percent.
c. 6 percent.
d. 66 percent.
QUESTION 3The school of economic thought which argues that through tax reductions, and deregulation, government creates the proper incentives for the private sector to increase aggregate supply is known as the:
a. rational expectations school.
b. neo-Keynesian school.
c. supply-side school.
d. new classical school.
e. classical school.
QUESTION 4Which of the following statements is true?
a. The Phillips curve has always been stable.
b. If the Phillips curve shifts outward to the right this illustrates a greater tradeoff between unemployment and inflation.
c. Keynesian economics assumes a vertical Phillips curve.
d. According to the natural rate hypothesis the Phillips curve is downward sloping.
e. All of these.
QUESTION 5Suppose that the consumer price index of a country was 160 at Year X and 168 at the end of Year Y. What was the country's inflation rate during Year Y?
a. 5 percent.
b. 8 percent.
c. 60 percent.
d. 68 percent.
QUESTION 6Those who favor government policies to stimulate the economy by creating incentives for individuals and businesses to increase their productive efforts are supporting:
a. supply-side economics.
b. Keynesian economics.
c. monetarist economics.
d. Marxian economics.