Question

According to adaptive expectations theory, expansionary monetary and fiscal policies to reduce the unemployment rate are O useless in the long run. O useless in the short run O ineffective on the price level O None of these. QUESTION 4 1 points Save According to the Phillips curve, a more expansionary macro-policy that causes inflation to be greater will: O place downward pressure on prices. O reduce unemployment. O reduce output O reduce the natural rate of unemployment. 1 pointsS QUESTION 5 nhillins curve during the:

Answer 1

3.

A.

As per the theory, these tow policies will not work in the long run. People make expectations on the basis of past information as the theory suggests.

4.

B

Increase in inflation, will cause unemployment to decrease as per the Phillips curve.

5.

C.

During the 1970s, the US economy was suffering from the economic phenomenon termed as stagflation that acted differently to the assumptions of the stagflation.

6.

B

As per the graph, when unemployment moves from 9% to 1%, then inflation moves from 3% to 14%.

7.

C

As per this hypothesis, the economy will always own natural rate of unemployment and self-correction leads to it.

10.

C

Phillips curve represents the inverse relationship between the inflation and unemployment.

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