Asked by Saanvi Patel on Jun 29, 2024
Verified
According to the Phillips curve, policymakers would reduce inflation but raise unemployment if they
A) decreased the money supply.
B) increased government expenditures.
C) decreased taxes.
D) increased the money supply.
Phillips Curve
An economic theory suggesting an inverse relationship between the rate of unemployment and the rate of inflation in an economy.
Inflation
A continuous rise in the overall price level of goods and services within an economy over a period.
Unemployment
The condition in which a capable worker who is actively seeking employment is unable to find work.
- Analyze financial environments and the results of policy decisions through the application of the Phillips curve framework.
Verified Answer
ZK
Zybrea KnightJul 03, 2024
Final Answer :
A
Explanation :
The Phillips curve suggests an inverse relationship between inflation and unemployment. Decreasing the money supply would likely reduce inflation because there is less money chasing the same amount of goods and services, but it could also lead to higher unemployment as a result of reduced spending and investment.
Learning Objectives
- Analyze financial environments and the results of policy decisions through the application of the Phillips curve framework.
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