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Phillips Curve

Explores the Phillips Curve relationship between inflation and unemployment, including short-run trade-offs, long-run verticality at NAIRU, expectations-augmented versions, and policy implications.

13 Questions Published
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Questions

Question 1 Multiple Choice (Single Answer)

What is the Phillips Curve?

  1. A graph that shows the relationship between inflation and unemployment.
  2. A graph that shows the relationship between inflation and interest rates.
  3. A graph that shows the relationship between unemployment and interest rates.
  4. A graph that shows the relationship between inflation and economic growth.
Question 2 Multiple Choice (Single Answer)

What is the shape of the Phillips Curve?

  1. A straight line.
  2. A curved line.
  3. A U-shaped curve.
  4. A bell-shaped curve.
Question 3 Multiple Choice (Single Answer)

What does the Phillips Curve show?

  1. The trade-off between inflation and unemployment.
  2. The trade-off between inflation and interest rates.
  3. The trade-off between unemployment and interest rates.
  4. The trade-off between inflation and economic growth.
Question 4 Multiple Choice (Single Answer)

What is the long-run Phillips Curve?

  1. A vertical line at the natural rate of unemployment.
  2. A horizontal line at the natural rate of inflation.
  3. A diagonal line from the origin to the natural rate of unemployment.
  4. A diagonal line from the origin to the natural rate of inflation.
Question 5 Multiple Choice (Single Answer)

What is the short-run Phillips Curve?

  1. A downward-sloping curve that shows the trade-off between inflation and unemployment.
  2. A horizontal line at the natural rate of inflation.
  3. A diagonal line from the origin to the natural rate of unemployment.
  4. A diagonal line from the origin to the natural rate of inflation.
Question 6 Multiple Choice (Single Answer)

What causes the Phillips Curve to shift?

  1. Changes in the natural rate of unemployment.
  2. Changes in the natural rate of inflation.
  3. Changes in expectations.
  4. All of the above.
Question 7 Multiple Choice (Single Answer)

What are the implications of the Phillips Curve?

  1. Governments can use monetary and fiscal policy to trade-off inflation and unemployment.
  2. Governments can use monetary and fiscal policy to achieve both low inflation and low unemployment.
  3. Governments cannot use monetary and fiscal policy to trade-off inflation and unemployment.
  4. Governments cannot use monetary and fiscal policy to achieve both low inflation and low unemployment.
Question 8 Multiple Choice (Single Answer)

What is the natural rate of unemployment?

  1. The rate of unemployment that is consistent with stable inflation.
  2. The rate of unemployment that is consistent with full employment.
  3. The rate of unemployment that is consistent with zero inflation.
  4. The rate of unemployment that is consistent with maximum employment.
Question 9 Multiple Choice (Single Answer)

What is the relationship between the Phillips Curve and the aggregate supply curve?

  1. The Phillips Curve is the aggregate supply curve.
  2. The Phillips Curve is the inverse of the aggregate supply curve.
  3. The Phillips Curve is unrelated to the aggregate supply curve.
  4. The Phillips Curve is a component of the aggregate supply curve.
Question 10 Multiple Choice (Single Answer)

What is the relationship between the Phillips Curve and the aggregate demand curve?

  1. The Phillips Curve is the aggregate demand curve.
  2. The Phillips Curve is the inverse of the aggregate demand curve.
  3. The Phillips Curve is unrelated to the aggregate demand curve.
  4. The Phillips Curve is a component of the aggregate demand curve.
Question 11 Multiple Choice (Single Answer)

What are the limitations of the Phillips Curve?

  1. The Phillips Curve is only valid in the short run.
  2. The Phillips Curve is only valid in the long run.
  3. The Phillips Curve is only valid in the medium run.
  4. The Phillips Curve is valid in all time periods.
Question 12 Multiple Choice (Single Answer)

What are the policy implications of the Phillips Curve?

  1. Governments should use monetary and fiscal policy to achieve low inflation and low unemployment.
  2. Governments should use monetary and fiscal policy to achieve high inflation and high unemployment.
  3. Governments should use monetary and fiscal policy to achieve stable inflation and stable unemployment.
  4. Governments should use monetary and fiscal policy to achieve zero inflation and zero unemployment.
Question 13 Multiple Choice (Single Answer)

What are the challenges of using the Phillips Curve in economic policy?

  1. The Phillips Curve is only valid in the short run.
  2. The Phillips Curve is difficult to estimate.
  3. The Phillips Curve is subject to shifts.
  4. All of the above.
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